Beyond Microeconomics and Macroeconomics: The Need for Indian Social Economics

Economics has been a fascinating social science that has accompanied the industrial revolutions. The first formal organization of economic thought, albeit in a political setting, is attributed to Adam Smith (1776) for his book “An Enquiry into the Nature and Causes of the Wealth of Nations”. Alfred Marshall’s text book “Principles of Economics” (1890) laid the foundation to the microeconomic branch of economics. The adverse economics of the Great Depression of the 1930s spurred the development of macroeconomic thought. John Maynard Keynes’ book “The General Theory of Employment, Interest and Money’ provided new perspectives of macroeconomic thought. Over the years, almost every aspect of human endeavour got its own economics perspectives; from industrial economics to welfare economics, for example. Microeconomics and macroeconomics, however, continue to be the more dominant streams of economics to date.

Microeconomics deals with the economic behaviour of individual markets, firms, entities and individuals, focusing on matters such as, but not limited to, production, cost, scale and efficiency; supply, demand and equilibrium; scarcities, surpluses and elasticity of demand and supply, costs and prices, and theories of firm and industrial organization. Macroeconomics deals with the issues of economy from the top, focusing on matters such as national income and output; jobs and unemployment; price inflation and deflation; savings, investment and consumption. Flow of money and business cycles as well as economic growth, international trade and international finance are some of the other considerations. It studies the impact of monetary policy and fiscal policy.  Monetary policy is implemented by the central banks to control the liquidity in the economic system to ensure economic stability. Fiscal policy relates to the use by the governments of revenues and expenditures, along with savings and taxes to influence economic growth.

Indian scenario

India, ever since its independence in 1947, has been following established economic theories to drive economic growth. The socialistic pattern of development curtailed free market economics until 1991 but the macroeconomic liberalization thereafter gave a new upward drift to the Indian economy. Regardless of the economic system, monetary policy followed by the Reserve Bank of India and announced in its periodic policy reviews, and the fiscal policy followed by the Central government and effected through the annual union budgets influenced the investment and consumption patterns of the society. The sensitivity of the markets to banking liquidity and interest rates and to tax and allocation policies has been only increasing with years. In addition, budget times have also become important periods for economic reforms and policy stimulation measures, including export-import policies, industrial development policies and poverty alleviation programmes.

India has been home to some of the sharpest economic brains. Amartya Sen, Amit Mitra, Arvind Panagariya, Ashok Desai, Bibek Debroy, Bimal Jalan, C Rangarajan, D R Gadgil, D Subbarao,  I G Patel, J C Kumarappa, Jagdish Bhagwati, Jairam Ramesh, Kaushik Basu, Manmohan Singh, Montek Singh Ahluwalia, Nanabhoy Palkhiwala, Omkar Goswami, P C Mahalanobis, Raghuram Rajan, Subramanian Swamy, V K R V Rao, Y K Alagh and Y V Reddy are some of the well-known names. Several political leaders including Jawaharlal Nehru, the first Prime Minister of independent India, and several finance ministers from C D Deshmukh and T T Krishnamachari of the yesteryears to P Chidambaram and Arun Jaitley of current years have been economically savvy leaders. Mahatma Gandhi, the father of the nation, had articulated his own brand of Gandhian economics targeted at economic self-sufficiency and growth of cottage and small industries which is relevant even today.

Intriguing India

Although the phrase “Incredible India” has been coined only a few years ago, India has always been incredible. The scientific and technical thought that went into the centuries old Indian heritage of Ayurveda, Yoga, Astronomy, Architecture (especially temple and palace architecture) was indeed phenomenal. Post-independence too, India demonstrated rare pluck to construct its own massive dams, build its own heavy industry, establish its own banks and financial institutions, develop its own educational infrastructure and creates its own aerospace infrastructure. India may not have gained global competitiveness but the country certainly acquired the capability for self-sufficiency that is rare amongst the emerging markets. In all this, adoption of micro and macroeconomics to an Indian context, in a somewhat serendipitous manner, played a role.  India’s development may have lagged behind its true potential but a base has certainly been laid for more accelerated development if right constructs are developed and relied upon.

At the same time, India has indeed been an intriguingly bipolar country characterized, for example, by paradoxes such as massive educational level but meagre skill level, strong penchant for growth but constraints all the way, vibrant democratic culture but strong vestiges of feudalism, and phenomenal wealth generation but continued acceptance of poverty. Economic growth with social equity has been the avowed objective of parties and governments alike but togetherness in fulfilling the growth with equity objective has been missing. The paradox of incredible growth potential constrained by intriguing plurality of thought makes one wonder if India can benefit to the requisite degree only by Western economic thought or would require a distinctly Indian economic constructs that are tailor-made to solve indigenous socio-economic problems without losing the global contexts. Even issues like quantitative stimulus or directed subsidies are not discussed and framed with objective economic thought that addresses India’s issues in a customized manner.

Success factors

India’s success would lie in enhancing agricultural productivity with sustainable crop economics, improving technological innovation with rapid commercialization, developing infrastructural sinews with meaningful capital productivity, expanding manufacturing capacities with global competitiveness, rural and urban renewal with protection of ownership interests, and creation of jobs with minimal migration pains. Economic policies and administrative actions of the successive governments have tried to provide policies and budgets with incentives and subsidies to tackle some of the above needs individually, depending on the political perspectives. Most of these have been based on established macroeconomic and microeconomic approaches which are buffered by Indian socio-economic and cultural compulsions. Given that all of these cumulatively have not helped India reach its full potential, it is time that economic models that specifically address India’s development concerns are created.

India’s socio-economic needs would require an Indian social economics theory (and practice) that addresses the typically Indian issues of (i) agrarian economics, (ii) infrastructure economics, (iii) Make in India economics, (iv) renewal economics, (v) employment economics, (vi) migration economics, and (vii) behavioural economics. The reason for focussing on the first six aspects is fairly obvious; if well-researched and well-modelled economic theory is developed on these aspects, not only better economic policies that stimulate gross domestic product and higher per capita income can be developed but also they can be better implemented with widespread support. These aspects which are independent as well as integrated can together provide better socio-economic development in the country. All of these will, however, need to be supported by a solid understanding of Indian behavioural economics with perspectives that are regional as well as national. The seven branches of Indian social economics are discussed below.

(i)                 Agrarian economics

India, despite decades of industrial development and the recent burgeoning of service economy, is still an agrarian economy. The potential for capacity expansion and productivity in agricultural production and distribution is impacted by crop economics on one hand and irrigation economics on the other. Economic models which assess the impact of crop mix on food grain and commodity self-sufficiency and the impact of dams on year-round crop patterns are required. The microeconomics of India’s debt ridden small farmer are affected by spot prices and distribution margins. While farm subsidies mitigate the burden to some extent, an in-depth study of crop economics for individual and national sustainability is required. Similarly, the economics of dams and reservoirs are also poorly understood. There is no reason why major irrigation projects like Polavaram (in Andhra Pradesh) had to hang fire for decades; economic modelling of irrigation projects could stimulate better allocations or encourage setting up of special purpose vehicles.

(ii)               Infrastructure economics

That India has lagged behind all the developed nations and key emerging economies in infrastructure development is well known. The NDA government has admitted that the public-private collaboration model has not had much impact, and needs redefinition. Most private sector infrastructure firms carry huge levels of debt from public sector banks. The economics of infrastructure development in the Indian context are unique with long lead times and slow returns even after project completion. From the project conceptualization stage through the project appraisal stage the economics of each infrastructure project need to be understood not merely in terms of the internal rate of return for the project but the overall economic uplift because of the multiplier effects of infrastructure projects. The study of infrastructure firms should be a special branch of microeconomics while budgeting of such projects should be a special branch of macroeconomics with appropriate monitory and fiscal policies to support.

(iii)             Make in India economics

With India’s low wage costs, large talent pool, frugal engineering and mass mobilization capabilities, the world should embrace Prime Minister Narendra Modi’s Make in India mantra enthusiastically. There are two caveats: India should evaluate and propose objectively to the investors the sources of economic advantage of Make in India strategy in respect of each industrial activity. Secondly, India should evaluate and propose for itself the role of India’s large domestic market in leading to globally competitive production. Typical economic thought teaches us that high-end niche products subsidize low-end mass products. In the Indian economic milieu, it could be the other way around; India’s bottom of the pyramid can provide huge scale economics which can be leveraged for global products. Tata Motors’ success with JLR is a corporate level economic behaviour of this theorem. There is a need for a more rigorous understanding of the unfolding Make in India economics. 

(iv)             Renewal economics 

India has an enormous need, and hence offers immense potential, for rural and urban renewal. There is no habitat that can be excluded from the renewal paradigm. Yet, renewal is not easy in India. The way the residual government of Andhra Pradesh is scrambling to build a new capital on a zero base as a multibillion dollar venture is proof of the developmental needs. However, as illustrated by the same example, any distributed renewal or new development – urban or rural – has several implications for overrunning current land use and community avocation practices, in spite of such renewal being essential. On the face of it, continuous renewal offers the most economical way of developing habitats in a distributed manner relative to big bang new constructions. Only when the economics of renewal are understood can the overall spatial planning in India, including development of smart cities and smart villages, can be brought to global standards, consistent with the Indian socio-economic imperatives.

(v)               Employment economics

India needs jobs for the democracy to work in a positive manner. The unemployment rates of India varied between 5 and 10 percent historically, and is currently trending at 5. 2 percent. This may be better than the Euro region which is trending at 11.2 percent but is only comparable with US and UK (trending at 5.5 percent) and worse than China and South Korea at 4.1 percent and less. More than gross employment, underemployment and overemployment as well as skill-need gaps are causes for concern. Underemployment is characterized by people performing jobs of lower level than they are capable of (for example, just digging trenches rather than building reservoirs). Overemployment is characterized by more people than required performing the same job (for example, three or more people manning a toll plaza post). Skill gap is characterized by an individual failing to work to a national or international standard (for example, a painter failing to prepare a surface prior to painting). The elimination of underemployment and overemployment and investment for skill development have economic implications that need a uniquely Indian thought.

(vi)             Migration economics

Urbanization is a concomitant of economic development, universally. Migration of people from rural areas to urban areas is also a natural accompanying phenomenon. However, unplanned and under-resourced migration causes urban squalor and triggers urban unrest. India has an additional dimension of people migrating from States of lower per capita income or lower economic activity to other States perceived to be better. The economics of migration with people chasing minimal employment tend to be mirages. Real economics would occur when economic activity moves into regions where people reside, and touch their lives directly. Large scale industrialization or large scale mining of natural resources with necessary caveats is one solution. More importantly, such underdeveloped regions should be stimulated with a small and micro enterprise start-up culture that brings soft economic touch to indigenous evolution and promotes self-sustainability. It must be a form of Gandhian Economics whereby the well-to-do regions and people act as trustees for the underdeveloped regions (be it, Bastar forests, Idukki river bed or Manyam agencies). Migration economics needs to be a uniquely Indian requirement.  

    

(vii)           Behavioural economics

Behavioural economics as is well understood is the study of the impact of psychological, social, emotional and cultural factors on economic decisions made by individuals and institutions, and the consequences for microeconomic and macroeconomic factors like costs, prices, savings and investments. Standard economic theory suggests that as long as individuals understand the economic consequences of their decisions they take decisions that are in their best self-interests. The reality is that individuals (and even institutions) suffer from biases and transient perceptions and do not necessarily have self-control and objectivity. Given the plurality of the Indian society and the lack of insightful literacy for vast sections of population (at all levels of the population pyramid) and the divisive nature of political discourse, economic decisions tend to be inappropriately made or even appropriate decisions tend to get stalled. We have seen earlier that there is a paucity of economic theories that are tuned to India’s indigenous problems. This inadequacy coupled with the vast mosaic of Indian behaviours makes it mandatory that Indian version of behavioural economics is urgently developed.

Indian social economics

The country is in need of an integrated Indian social economics thought which applies all the established disciplines of economics including, in the main, micro and macroeconomics, to develop economic principles that are uniquely relevant to India to enhance capacities, capabilities and effectiveness in the areas of agriculture, infrastructure, manufacturing, renewal, employment, migration and behaviours. These are typically Indian issues on which everyone is agreed in terms of the overarching goal of economic growth with social equity. However, lack of directed and issue-specific economic thought has prevented due progress and fulfilment of potential. India does have its general and applied schools of economics. Every premier college or institution has a department of economics. There are also specialized institutions like Madras School of Economics, National Council for Applied Economic Research (NCAER), Institute for Social and Economic Change and so on.

The established schools and centres, however, have not been focussed on analysing economic issues that need to be specifically addressed in India. Nor has there been an effort to develop economic principles that guide public policy and governance at central and state levels. While several case studies have been conducted, there has been no specific vision to develop an India-specific economic theory. Intellectuals and administrators are more focused on variations in known policy measures and instruments rather than develop India-specific prescriptions. Now that the NDA government is keen to establish new centres of higher education and research and the States are also keen to participate in such higher educational initiatives, it would be appropriate to establish Indian Institutes of Social Economics and Research in the principal geographical regions of the country to develop India-specific economic thought and practice with a board of economists with Indian and indigenous passion.

Posted by Dr CB Rao on March 8, 2015

     

         

Twin Track Travel in Life: Aligned Harmony or Oscillating Freeze?

Choice is a wonderful and important thing in life. Classical economic theory brought out the many imperfections of lack of choice through its analysis on monopoly. Governments, societies and individuals believe that choice and competition are in the best interests of consumer. In the ordinary course of life, an individual is beset with choices. One has to open an Education page of any Indian newspaper to see how the students are wooed by multiple options in education, from specializations to countries. Even a simple thing as dining in restaurant is not easy given the multiple individual and combo options that are made available. On a serious note, however, the individual has a right to, and responsibility in, making prudent choices so that the individual and those dependent on the individual benefit from the choice made.

My earlier blog post (Strategy Musings, February 28, 2015) titled “Deliberation, Information, Decisiveness and Implementation (DIDI) Model: A Logical Pathway to Progress in Multi-Option Life” (http://cbrao2008.blogspot.in/2015/02/deliberationinformation-decisiveness.html) articulated a model to progress in life. It suggested that individuals need to understand the true meaning and the essential relevance of deliberation, information, decisiveness and implementation as the four components of an accelerated journey of progress in life.  The post also observed that despite the logic of such an approach requiring high deliberation based on quality information and quick decision making followed up by quick implementation, even intellectually capable people tend to vacillate or freeze in life because of digressions they encounter in their paths of progress.   

Choice or chance?

In today’s world where information is overwhelming, and either certification or branding is common, there is apparently scope for perfect (or near perfect) choice. This need not necessarily be true. On may choose a good educational institution for study but the class to which one may be assigned could be random while the quality of teachers and friends could be even more random, with positive or negative results relative to others. One may choose an international travel plan with thorough research on the likely weather conditions but it could be beyond one’s choice as to whether an airlines management would or would not cancel flights for a particular level of storm. In life, choice and chance arguably play unpredictable roles, influencing the journey on path of progress.

Many times, a chance occurrence can cause dramatic transformations in the life of an individual or even nations. Nothing illustrates this better than the treatment meted out to M K Gandhi in rail travel at Pietermaritzburg station, South Africa on June 7, 1893 that transformed Gandhi’s life goal and eventually changed the course of history for India. In our lives, we do meet persons or pass through institutions that offer game changing opportunities. In some cases, well laid plans including established career options turn out to be adversarial. Chance in all such cases has to be coupled with choice to be able to overcome the adversity or utilize the opportunity provided by chance. When chance is met with by choice, the individual has to be resolute and diligent to embark on the new path with determination.

One step but long track

In several cases, the step one takes at the junction-in-time of chance and choice tends to have far reaching consequences. What appears to be one small step would roll out to become a long track. Perseverance and patience are the key; even if the track turns out to be different from what one envisaged, it would make sense to wait for the next time-junction of chance and choice rather than make hasty changes. In life, the same goal can be reached in multiple ways, and the fact of being compromised on a route that is not entirely of one’s choice need not deter one from switching tracks at a more appropriate time. Well thought out or opportunistic switches from one career to the other, or between work and education help one reach the desired goals, despite false starts. 

Equally, not being patient and persevering could make people lose whatever value that is inherent in a path. Traders in commodities and stocks who are impatient tend to end up losing the corpus let alone making money. Yet, sophisticated algorithms and predictive tools provide a false sense of security for shorting the future. Emotional stability and contextual equanimity are two oars one has in navigating the choppy waters of progress. This requires that being reflective and introspective as well as being thoughtful and mindful is essential whether or not one is on a preferred track. Action or implementation is physical and tangible while thinking or deliberation is virtual and fleeting.

The tracks

An individual has two important tracks to move on; the first is the implementation track which is real, physical and tangible, whether one likes it or not. The other is the deliberation track that is virtual, mental and emotional, whether one desires it or not. As considered in the earlier blog, deliberation track makes one get on to the implementation track. However, the deliberation track keeps on working even when one is on the implementation track. It is up to the competency and maturity of the individual to use the deliberation track to the advantage of the implementation track. The deliberation track has to constantly evaluate if the implementation track is taking the individual closer to the goal or a momentum change within the track or even a track change is required, and if so the appropriate timing in each case.

Mahatma Gandhi said “Happiness is when what you think, what you say, and what you do are in harmony” He also said, “A man is but a product of his thoughts. What he thinks, he becomes”. Albert Einstein said “Imagination is more important than knowledge”. These quotes by the greatest of leaders in humanity and science respectively teach us that the power of positive thought can help one achieve one’s life goals; probably even set the goals right. It is, therefore, of utmost importance that one gains mastery over the internal and intrinsic deliberation track. Whether one accomplishes that through the practice of meditation and concentration or continuous self-correction is something for the individual to mull over and follow.

Twin tracks

The above leads us to conclude that in the best way forward, the deliberation track is in harmony with the implementation track either acting as the way forwarder or course corrector. However, the deliberation track can be inhibitory, digressive, and sometimes even regressive. Consumer psychology is full of anecdotes wherein wayward consumer thought processes make for randomly repetitive purchasing behaviour of consumers. After a dish is ordered in the restaurant, the one ordered on the other table looks interesting. After a Samsung Galaxy is bought, Apple iPhone beckons for the next purchase. After one flight route is booked, another may look to be safer and surer. Deliberative waywardness may cause only minor dislocation in matters like these but could cause untold harm in more serious matters of life like education, career and family.

Dilemmas are not new to human life. Wanting to have everything is also a part of human life. The classic expression of “to be or not to be” by Prince Hamlet in Shakespeare’s play Hamlet leads the pack on dilemmas. The human being desires to have the best of everything, at times illogically and at times greedily. The idioms “running with the hare and hunting with the hound” and “having the cake and eating it too” are strikingly descriptive of this innate characteristic of a human being. The culture of human evolution and the challenge of progress, however, require that the human being prioritizes what he wants and work towards achieving it. The ability to appreciate choice and chance on one hand and deliberation and decisiveness on the other hand is an essential part of the practice of human progress. 

  

Interfaces

There are four ways the twin tracks of thought and action can interface. These are Aligned Harmony, Delayed Delivery, Random Digression, and Oscillating Freeze.

The most effective one obviously is Aligned Harmony in which thought and action are harmoniously aligned to the goal. Some of the best inspirational missions of individuals like Mahatma Gandhi’s independence movement or Nelson Mandela’s anti-apartheid movement and technological missions of organizations, be it NASA Man on the Moon Mission or ISRO’s Mangalyaan Mission (India’s Mars Orbiter Mission) are accomplished under the Aligned Harmony format. This corresponds with a high deliberation-quick decision format.

Delayed Delivery is beset by nagging doubts on whether the route pursued is the right one but at the same time is handicapped by lack of alternatives. This erodes confidence and commitment in the route pursued. This corresponds with low deliberation-slow decision format.  Lack of deliberation and consequent facile decision making lead to tardy progress without commitment or belief.

Random Digression occurs when an uncontrolled deliberation track derails the individual to switch on to disruptively alternative action tracks. A researcher constantly in search of alternative hypotheses or research methodologies even while progressing on one hypothesis is subject to random digression. Achievement of goals can be highly sub-optimal for such individuals, relative to time and effort spent. This corresponds with high deliberation-slow decision syndrome.

And finally, Oscillating Freeze occurs when an individual (or organization) iterates himself (or itself) before accomplishing even the first milestone in each case. In this case, even as action track moves forward the thought track moves backwards. A student who does engineering course wishing all the time that he should have done medicine or a professional who has chosen a particular job wishing all the time that he should have joined the other firm. Such people freeze in their tracks every now and then as their heart and soul are not in what they are deployed on.

Individuals as well as organizations who appreciate and achieve aligned harmony between thought (or deliberation) and action (or decisiveness) understand the eclectic fusion of chance and choice in life, and the interdependence of thought and action, and therefore are made for sustainable success in a complex and confusing multi-option world.

Posted by Dr CB Rao on March 1, 2015          

     

Deliberation, Information, Decisiveness and Implementation (DIDI) Model: A Logical Pathway to Progress in Multi-Option Life

Progress is the essence of life. Everyone, from the time of development of cognitive abilities, embarks upon, knowingly or unknowingly, on a journey of progress. Not many, however developed they are on cognitive scales, realize certain fundamentals of progress. These are: a clear destination, a clear path, a focused execution, and the next progress journey once the destination is reached, all within a clear understanding of the competencies and resources required. Not many also develop these guideposts by themselves with introspection, reflection and ownership; they are subject to myriad influences from families, friends, institutions and societies. To cap it all, very few have the philosophical approach to appreciate progress and take in stride regress. No wonder then that a feeling of having failed to progress as much as one should have is universal; only the shades vary across the rich and poor.

Ironically, the distress about lack or inadequacy of progress seems to increase with increasing prosperity while blind acceptance of status quo seems to deepen with increasing poverty. These and various other related socio-economic and socio-philosophic considerations are extremely complex, and do not easily lend themselves to one macro-analysis or a simple macro-solution. What can, however, be considered is why individuals in their own spaces of competencies and aspirations struggle with issues of progress and satisfaction. It is intriguing as to why factors as simple as destination, path and execution should defy clear mastery by even with people high level of intellectual capability. The reasons are fairly simple; the human brain is continuously subject to triggers of speedup and slowdown which continuously make individuals accelerate or vacillate, in their journeys of progress in a life setting that is becoming increasingly multi-optioned.

Accelerators and vacillators

A progressive life has its own momentum. It is marked by change with its own velocity and periodic acceleration. The accelerators are partly wired in one’s personality (for example, get rich quickly, climb up social ladder fast, win laurels, take risks to accelerate, and so on) but also require environmental triggers (for example, a new start-up culture, a new savings and investment ecosystem, more attractive financial instruments, an aggressive family environment, and so on). When these factors, part internal and part external, combine for an individual, the destination, path and progress tend to be clear. Doubtless, there would be speed breakers on the way but the accelerators have their inbuilt momentum to cruise along. The downside would stem occasionally from their adventurous nature, failing to distinguish between speed breakers that are mere cautions and those that are precursors to dead-end points.

Vacillation is the threat to acceleration in the journey of life. Vacillation is a result of confusion or lack of clarity in one’s mind. Vacillation as much as steadfastness, and confusion as much as clarity are normal human tendencies because of the way each individual is wired in terms of one’s personality (for example, risk-averse, self-satisfied, and so on) and the way external environment tends to project short term disappointments as long term distress (for example, volatility in commodity prices, job market trends, and so on). When these internal and external factors combine for an individual, the destination and path would appear to be hazy and progress tardy. Doubtless, there would be compelling pressures to gain traction on account of socio-economic benchmarks but the inherent trend of vacillators would be to procrastinate rather than decide. In fact, the matrix of deliberation and decisiveness can be utilized by accelerators and vacillators alike to overcome their inherent weaknesses, and reinforce their strengths.

Deliberation and decisiveness

Individuals tend to be scaled on the two dimensions of deliberation and decisiveness. These two dimensions are commonly seen to be inherently contra to each other. An individual who is least deliberative may tend to be quickly decisive while an individual who is extremely deliberative may tend to be least decisive. This is a simplistic view. Individuals tend to be on a scale of low to high on deliberation as well as on decisiveness. And, not in all cases there would be any correlation, positive or inverse, between the two variables. Individuals must carefully develop themselves on the deliberation-decisiveness matrix. There would be four groups of individuals; (i) low deliberators-quick deciders, (ii) high deliberators-slow deciders, (iii) low deliberators-slow deciders, and (iv) high deliberators-quick deciders. Clearly, presence in the group (iv) is something to be aimed at.

While lack of deliberation is not healthy, excessive deliberation without quick decision making is counterproductive. While being a slow decider is not a virtue if the slowness is due to high deliberations it is probably next to the best. Obviously, being a low deliberator and quick decider would lead to unhealthy choices. Being a low deliberator and slow decider is also a sure recipe to a skewed and frozen life. Being high on deliberations and simultaneously being quickly decisive gets the best of both the worlds to the individual. Individuals belonging to this group possess and develop a high level of information processing capability. However, the deliberation-decisiveness matrix needs to be further cascaded in terms of linkage between information and deliberation on one hand and decisiveness and implementation on the other.  Here again, a matrix approach provides clarity to individuals.

Information and implementation

Deliberation can only be based on information. In today’s Internet world there is no paucity of information; in fact, one is overwhelmed by data and information. However, the greater the availability of quality information the greater the possibility of quality deliberation. Even then there is no assured linkage. We can have (i) low deliberators-low information (this probably is a hapless group!), (ii) low deliberators-high information (this group is handicapped by low information processing capability), (iii) high deliberators-low information (this group specializes in procrastination), and (iv) high deliberators-high information (this group makes for quality analysis and decision making choices). While information is the core of deliberation, deliberation is the proper precursor to decision making. Decision making, of course, is futile without implementation.

Decisiveness gets reinforced with implementation capability (often termed execution in management language). There is no automatic connection between quick decision making and speedy implementation. The former is largely an individual phenomenon requiring an ability to analyse self and environment while the latter is a leadership capability requiring an ability to understand, lead and manage others. Here again, a matrix approach would be helpful. We can have (i) slow deciders-slow implementers, (ii) quick deciders-slow implementers, (iii) slow deciders-quick implementers, and (iv) quick deciders-quick implementers. The first group clearly is the non-starter group in today’s competitive world while the second group, though blessed with quick start, is a losing proposition. The third group makes up for procrastinated decision making with quick implementation while the fourth group is the truly competitive group excelling in both decisiveness and implementation.

Pathway to progress

The above discussion leads us to the conclusion that one should be a member of three conceptual groups to make meaningful progress. Fundamentally, one should be a high deliberator and quick decider. This enables higher quality of decision with a faster go-to-market possibility. High deliberation, however, should stem from a capability to process high amount of information. Quick decision making, likewise, should be followed through and reinforced by an ability to quickly implement. As compared to this virtuous grouping of three, there tend to be nine other groupings which are sub-optimal or even counterproductive. The odds of placing oneself, naturally or effortlessly, in the superior grouping are statistically adverse, which requires that individuals need to understand the true meaning and the essential relevance of deliberation, information, decisiveness and implementation as the four components of an accelerated journey of progress in life.

Interestingly, decision making happens only periodically and implementation follows with a specific time horizon (not to be whimsically changed). This applies equally to a student’s educational path or a businessman’s industrial path. However, flow of information and, therefore, the triggers for deliberation occur rather continuously for any individual in any play of life. It is important to keep the deliberation process on but manage it such that it does not confuse a person and make the path of progress a meandering one. For those who manage this balance in the DIDI Model on an ongoing basis success comes naturally and logically. It is, however, amazing to see how even intellectually capable people get thwarted on their paths of progress. There could be an explanation of that too. Those who are mindful and thoughtful of the digressions could still be successful. That could be the subject of another blog post!  

Posted by Dr CB Rao on March 1, 2015

       

   

  

Indian Institute of Technology (IITM) Management Musings: Pioneering Professors of Management in Amazing Ambience of Technology

Indian Institute of Technology Madras (IITM) has been one of the foremost institutes of technological and scientific education and research in India for the last few decades. IITM was inaugurated on July 31, 1959, and by an Act of Parliament in 1961, IITM was declared as an Institute of National Importance in 1961. The Institute was backed by collaboration with the German Government. The first batch of B Tech graduates, a 5 year course at that time, passed out in 1964. There has been no looking back for the Institute from then on, as it continued to expand and diversify in its course offerings and student intake, establishing schools of excellence, year over year. Most alumni from IITM have occupied and continue to occupy leadership positions in their chosen specialities.  Dr A Lakshmanaswamy was the first Chairman of the Board of Governors while Dr B Sengupto was the first Director of the Institute. Initial Directors brought exemplary guidance to the Institute which successors tried to preserve and grow.

IITM was amongst the best among the IITs for its picturesque campus with vast flora and fauna. It was also very much a part of a growing city. Set adjacent to a vast reserve forest land, the campus even today ranks as a deer-friendly nature park. The campus had its own specialities from the central Gajendra Circle (GC) to the unique Open Air Theatre (OAT).‎ In fact, nothing symbolised the open and free spirit of IITM more than the OAT which has been a host to movies every Saturday (even in examination or vacation seasons) and to several special seasonal events such as Mardi-Gras and Sarang. IITM’s hostels were notable for their simple single room accommodation but exemplary food services. The common rooms of the hostels provided the magazine and newspaper fodder for the avid reader while there was nothing other than a humble canteen for a hangout even up to the 90s.

Course architecture

Initially at the time of its inception, IITM had just five technology streams: Mechanical, ‎Civil, Chemical, Metallurgy and Electrical. Each of the disciplines was endowed with dedicated teaching blocks and impressive workshop infrastructure. IITM was a pioneer in establishing humanities and social sciences (HSS) as an integral part of its engineering curriculum from the very beginning. Over the years, HSS began offering M Tech and Ph D programmes in Industrial Engineering and Industrial Management from the late 1960s. Eventually, even as the technology and scientific disciplines proliferated with more specialisations and sub-specializations, a Department of Management Studies came into being in 2004 to offer specialized MBA equivalent programmes.

Without doubt, there has always been a great and unmistakable technol‎ogical ambience and culture at IITM. Yet, it was somewhat intriguing to see such technology talent moving to the Indian Institutes of Management (IIMs) to join management courses. The other aspect, much discussed of course, has been the flight of talent for advanced courses in technology and management abroad, especially the USA. The emergence of distinct schools of management in the IITs, probably a naïve attempt to fight the two trends (or a practical approach to respond to popular trend) took root first in IIT Bombay and eventually all the IITs including IITM followed suit. Unfortunately, unlike in ‎some IITs there has been no major external sponsorship of the management school in IITM. That makes the growth of the management department at IITM even more impressive.

Pioneering professors

Long before the management school came on, a few professors were pioneering management education as part of the humanities and social sciences department, from the 1960s. As a student of the M Tech programme in Industrial Engineering of 1972-74 batch and the Ph D programme in Industrial Management later on, it was my privilege to witness some of the pioneering professors in management strive to be both differentiated and integrated simultaneously in the amazing, and occasionally overwhelming, technical ambience of IITM. Professors R K Gupta in Business Policy and Strategy, Dr S Ramani in Industrial Engineering, Dr V Anantharaman in Organizational Behaviour, Dr L V L N Sarma in Financial Management, M Durga Prasada Rao in Management Accounting, Dr A  Ravindran in Operations Research (visiting faculty from Purdue University), M G Asthana in General Management, Dr A V Krishna Rao in English, Dr Y Nagendra in Statistics and Dr Dipak Chaudhuri in Reliability and Maintenance Management were the early pioneers. Micro-economics was taught by Professor Ganesan from Vivekananda College with a great quantitative flair while Macro-economics was the forte of Hamsaleelavathi.  V Arumugam from College of Engineering was a passionate advocate of Work Study.

It required conviction and passion on the part of the founding professors and the other lecturers who supported them to develop and institutionalize a stream of management education in IITM from the 1960s, in a period of the Institute when such management education was seen as a needless diversion by the technology deans of the Institute. Also, it is to the credit of the professors that early on they laid the base for Ph D programs in industrial management and industrial engineering, taking a step ahead of the IIMs in that respect. But for their vision and persistence, the school of management would not have seen the light of the day. Nor would the next generation professors like Dr T T Narendran and Dr L S Ganesh (who became the Head of the Department of Management Studies) have been moulded as researchers of the first order. Unlike the IIMs, however, the professors were inward oriented focusing less on industry interactions and consulting assignments, which probably explained the low visibility of the IITM management programmes to the industry.

Unique pedagogy

The IITM management professors had unique pedagogical approaches. Professor Gupta brought to bear day to day simplicity to business policy and strategy, weaving finance and accounting concepts in the study. He was a patient teacher and was always waiting for the class to think on its feet and respond to his little intriguing but earthy questions. Dr Ramani made the complex canvas of industrial engineering a fascinating potpourri of supply chain management and management information systems, peppering the traditional time and motion study. Dr Anantharaman was unparalleled for his keen understanding of human behaviour and scintillating sense of humour. He made the multiple organizational behaviour theories of management gurus come live through his extempore presentations. His group dynamics human laboratory exercises helped many of his students understand the meanings of visible facade and invisible self that govern all of organizational behaviour.

Dr L V L N Sarma exemplified the virtuous approach to management studies. Powered by a keen intellect and a sharp wit, he propagated many techniques and tools of modern financial management, from dividend signalling to portfolio analysis and from discounted cash flow to ratio analysis, long before they became fashionable.  Professor M D P Rao made the dry but critically important discipline of management accounting as simple as the peeling of banana. Between the teasing of master accountant Guptaji and the challenging of the financial strategist LVLN, MDPR’s genial approach provided the much needed comfort to the engineers who tended to be at sea in the accounting and finance oceans! No one who went through IITM management can forget the rigour of statistics as taught by Dr Nagendra. He was such a master in statistics that the ordinary failings of his students looked unforgivable to him. So was Dr Dipak Chaudhuri in his exposition of quantitative rigour for developing reliability and maintenance management paradigms befitting of engineers. S G Asthana was an ever-smiling exponent of principles of general management, taking care to move students along with him.

Dr A V Krishna Rao who headed the English faculty as well as the department for several years taught the linguistic and communication skills with an everlasting smile. Amongst the next generation professors, Dr T T Narendran set out new vistas in systems simulation while Dr L S Ganesh focused on operations research, forecasting, decision sciences and public policy. Dr L S Ganesh was particularly focused on matters of public policy as much as on the emotional wellbeing of the students. Dr R N Anantharaman came on to fill the void left by Dr V Anantharaman with his brand of classic psychology for management. The Industrial Engineering stream continued to get enriched by Dr C Rajendran and others. As with any institutional evolution, old guard yielded place to the new, but one cannot but recollect with nostalgia and respect the contributions made by founding professors of management, humanities and social sciences in an overwhelmingly technological ambience. Credit also must be given to the fact that the technological depth of IITM gave a rare edge to management students – who else other than Professor H N Mahabala could have taught Computer Science and Engineering in such a delectable manner in the overflowing hall of Central Lecture Theatre (CLT)?

Uniquely different

It is to the credit of the management professors at IITM that‎ despite the overwhelming technology ambience they did not succumb to style over substance. While they could have appeased by christening their course as Technology Management to the appreciative nods of the engineering faculty, they chose to name and position management for what it is as a unique and integrative discipline. As compared to the IIMs, however, they gave a strong quantitative bias to the management course, making the graduates hone their analytical skills further. With certain specialized course focused on aspects of inventory management, reliability management, statistical quality control, operations research and management information systems, they laid the foundation for the subsequent evolution of Operations Management discipline. Dr A Ravindran added a masterly touch to the courses at IITM with his inimitable teaching of Operations Research. One of the more complex yet real time oriented branch of mathematics, Operations Research was followed by the students with total absorption when Dr Ravindran taught the subject.

Amidst the quantitative orientation, the perspectives and insights that were generated out of organizational behaviour and financial management were unique and absorbing to the engineers who made up the intake. It is to the credit of the professors, Dr Anantharaman and Dr LVLN that they offered the mind-expanding disciples as serial courses across semesters helping the engineers become better real world managers. It is even more creditable that the professors encouraged full-fledged MS and Ph D‎ programmes in such core non-technical disciplines too, adding to the multi-disciplinary nature of IITM. In fact, MS by research is a programme unique to IITs, representing a bridge option for those students who are research oriented but do not wish to spend several years on a deep research topic. Many students in management found the MS option relevant and satisfying.

Blessed I am

While God decides our intrinsic capabilities and competencies through genetics handed down through parents and grandparents, te‎achers and professors play a significant role in expanding our horizons, deepening our knowledge, honing our competencies and developing our capabilities. In a way, institutions such as the IITs and IIMs and their dedicated professors, and the competitive but egregious student population help us re-discover and re-position ourselves. It is my fortune that as a student of the M Tech Programme, I was spotted, developed and appreciated by my learned founding-professors of Industrial Management and Industrial Engineering. If the M Tech programme in Industrial Engineering made me confident and capable as well as industry ready, the Ph D programme helped me to drive attributes of perfection and diligence to new highs, and more importantly embed in myself the fundamental tenet of robust research - understand the available knowledge, hypothesise alternate constructs and validate through empirical research a new paradigm that adds to the body of knowledge.

My research journey in IITM, which started with the guidance of Professor R K Gupta but was essentially guided and concluded under the supervision of Dr L V L N Sarma was a journey from one pole of knowledge (stimulatingly descriptive of Guptaji) to another (diligently analytical of Dr LVLN). It taught me how to utilize data and information to develop new hypotheses and validate them. It is this (positively!) bipolar quest for knowledge that attracted me to the fascinatingly descriptive Michael's Porter's works on Competitive Strategy and Competitive Advantage but go on to develop a validated analytical construct to quantitatively and statistically validate certain follow-on as well as original hypotheses of competitive strategy. If my Ph D thesis "Strategy and Structure of the Indian Automobile Industry: A Study of the Four-Wheeler Sector" remains a path-breaking thesis to date that gave a unique quantitative foundation to Porter’s descriptive theories, with several constituent papers having been published in refereed journals, I have to express my gratitude to the Indian Institute of Technology Madras, and its pioneering professors who shaped my knowledge perspectives, notably Professor R K Gupta and Dr L V L N Sarma.

Tailpiece

When I was in school, I was fascinated by the stories penned by Sri Mopineni Durga Prasad Rao and Sri Lellapalli Venkata Laksmi Narayana Sarma and published in Telugu weeklies regularly. They were full of humorously incisive analyses of family and social relationships, and the quirkiness of human relationships. My joy knew no bounds when the very same famed writers of fiction happened to be my professors at IITM!   

Acknowledgements:

I must gratefully acknowledge the role played by all the educational institutions, and the teachers of each institution, in developing me; these being Sri Sai Baba National Higher Secondary School, Anantapur, P R G C Higher Secondary School, Kakinada, Government College of Engineering, Anantapur affiliated to Sri Venkateswara University at that point of time, and finally the Indian Institute of Technology Madras, Chennai. 

Posted by Dr CB Rao on February 27, 2015

     

Perpetual Heat-Energy Cycle: An Un-packaged View of Life

Our world depends on heat-energy cycle to run itself. Without heat power cannot be produced and without power heat cannot be generated. Yet, so much of heat that is generated in our industrial, office and residential lives goes wasted into the atmosphere. While so much is going on in the fields of renewable energy and recycling, there are more sources of material heat that are wasted than are utilized. Packaging is one example.

Packaging, flatter to discard

Among the various factors of energy efficiency, packaging has received rather lower level of attention. From a protection and aesthetics point of view, packaging has no doubt received attention to withstand different types of transportation or to cater to multiple discerning eyes. From individualized blister packs for pharmaceuticals to customized elegance packs for cosmetics, packaging has evolved as a fusion of technology and art. Packaging has become an important aspect of enhancing shelf life and securing brand recall, as a consequence. For some products such as food products, packaging is an important source of product and consumer information. It is not, therefore, surprising that packaging has become a specialized discipline.

There is yet another more fundamental packaging that has received attention as a different fusion of technology and art. This is nothing but the covers between which the basic products are locked or sealed. Most products are sealed in one or more of geometrical shapes, the most common being a cube or a hyper-rectangle, apart from a prism, cylinder or cone. Although complex industrial products are difficult to describe in such structured shapes, they are held together under shapes that variously mimic structured geometric shapes. One of the most extravagant cover design has been that of a transistor radio or cathode ray tube computer monitor in which the operating internals occupied less than a quarter of the boxed space. In amazing contrast, today’s cell phones represent increasing levels of cover to cover efficiency.

Usage efficiency

Despite its importance, pack is the first component of a product system that is discarded. Depending upon the product, nature and the stage of use, the usage efficiency of a pack varies from 100 to zero. A fruit drink tetra pack is an example of the decline over use, and ultimate discard. A milk sachet, on the other hand, gets discarded immediately after it is opened for use of milk. The box that covers a laptop gets discarded immediately after the product is opened. The box that covers a jewel may never get discarded at all. Clearly, the moment the need for protection ceases the package gets discarded. Over a period, if one billion products are used, one billion primary containers and more than one billion secondary and tertiary packs get discarded. The more paper, cardboard and plastic is used in the world the more is the level of waste.

While this is understandable, and probably inevitable, the product itself varies between 25 and 50 percent in terms of usage efficiency. In any product, what is not seen (the back and edges of the product) is wasted space while what supports the installation reflects passive yet essential usage. The slimmer the product, the lesser is the wastage on edge but the back remains as wasted as ever. Obviously, it must make technical, economic and market sense to try to use the whole of product. It would be wasteful to devise ways to achieve wraparound efficiency of products at costs higher than that of the wasted space. The product-pack conundrum would continue to evolve to satisfy the consumer but little is being thought of about packs as sources of energy.

Edging forward

Technology geeks would have noticed a product released by Samsung a few months ago, called Galaxy Note Edge. It has a display which is curved to the right as a single unit with the right strip displaying key information and notifications as well as health monitor, and leaving the main screen uncluttered for full display. Soon, the left side may also be edged forward to incorporate additional information and operating fundamentals. As much as the dual screen laptops and the transformer models, this edge design is a small but important signal that designers are finally warming up to the fact there is so much space in the products that could be put to beneficial use. As the pricing of Edge product indicates, the innovative design with additional manufacturing complexity and hence additional cost.

If edges are ready to be innovated would the back panels be far behind? Future phones may feature front and back displays with the back displays being dedicated for semi-dynamic special uses such as listing of important telephone numbers, health monitor history or news scans. Even accessories such as phone covers, and phone chargers could come with additional functionalities. A mouse may not just remain as a mouse. From the palm that holds the mouse, a range of health and emotional information may be fed to the computer and scrolled along the display screen. The basic driver of the edge-forward principle is that no surface of a product can be just passive; it is an opportunity for technological innovation and customer satisfaction. Taking technology forward, would packs and products be designed to support a perpetual heat-energy cycle?

Heat converters

Passive spaces can be used for displays in certain classes of products. In such products or others which generate heat they are also used as heat sinks or passive heat exchangers that spread the heat generated in the operation of the product into the atmosphere. From computers and cell phones to air conditioners and machine tools, heat sinks are an essential component of all mechanical, electrical and electronic which use or develop kinetic energy. This, however, represents, one of the most uncontrolled and wasteful dissipation of energy. Reverting our preamble, the larger surface area provides for greater efficiency of heat sink while leading to waste of more material and space. Miniaturization makes the principle of operation of heat sink more challenging.

While technology has developed a lot, technology to convert heat from a range of day to day heat generating sources, from devices and equipment in shop floors, offices and homes into usable energy is yet to be mastered. While thermoelectric devices and solid state materials have been used to achieve this, a universally applicable and simple to use technology is yet to be developed. Thermo-galvanic technology is being attempted by MIT and Stanford researchers. Other researches are working on nanotechnology to convert heat directly into electricity. However, most promising developments are still in laboratory stage and need new breakthroughs to become commercially usable.

Power accumulators

The key to capturing all of the waste energy from devices and equipment in factories, homes and offices lies in the development of reverse batteries which can be connected to the heat generating sources and converting the heat energy into storable electricity. The time is ripe for widening the concept of rechargeable batteries, as essential energy accumulators at homes, offices and factories. They should be available in multiple storage capacities and should be capable of connecting to laptops, computers, televisions, fitness equipment, machine tools, stoves, and any other device that generates kinetic energy. The power accumulators at the flick of the switch should be able to provide electricity to devices.

Rechargeable batteries have been in vogue for decades. Conventional rechargeable batteries take power or charge from electricity. The power accumulators being talked of here require the technology to convert heat directly into electricity. As discussed in the previous section, the technology is in the making and would see commercial light sooner than later. Also, conventional batteries need to be developed with casing that is water and dust proof and can be installed in the open, to be exposed to and accept solar energy. The key is to develop right-sized rechargeable batteries that can be connected to all heat sources in a typical factory, office and home, from diesel generator set or a boiler, computer or air conditioner and kitchen stove to tube light. In fact, as technology, such heat and power accumulators should come as original equipment accessories.  

Incinerators and converters

Reverting to the opening part, billions of products being consumed by the billion plus population of India generate more than billions of packaging materials. The amount of newspapers, magazines, packaging paper, card  boards and other packing materials generate millions of tonnes of garbage that is either mixed up with wet wastage and is rendered unfit for recycling or just wasted through random dumping or burning. If each neighborhood has an incinerator to which burnable material is channeled daily, there would be great potential to generate heat based power in all communities. The ultimate solution is to have a home based, commercially viable incinerator solution.

Rural areas as opposed to urban areas provide an even greater opportunity to convert dry waste, wet waste or even mixed waste into heat and power or flakes and compost. These outputs can be appropriately integrated with the agrarian and farm lifestyles that are more flexible and open, relative to urban systems and structures. There are available as technologies but need to be commercialized with continued technological developments on one hand and fiscal incentives on the other. The key, of course, is a mind-set change that encourages tackling waste at source, rather than collect waste and make it an unmanageable collection, distribution and conversion problem.  

  

An anti-waste mind-set

The mind-set change must focus on unpacking simple products at the point of sale, once the product is purchased. This would represent the best way to deliver products and preserve packs for centralized recycling or power generation. Agencies which install large equipment in homes, offices or factories must take back the packaging materials. Similarly, a home, office or a factory must have its own incinerator or waste converter cum power generator. Wherever heat exists there should be a heat sink. A perpetual heat-energy cycle needs an un-packed view of life!

Posted by Dr CB Rao on February 1, 2015