SEBI in India – It is right to be wrong

Thomas Hobbes' theory of justice depends on certain observations on human nature – doubting our ability to come to some agreement about what is just.  I agree.  Indians must give up the search for the Summum Bonum – Cicero’s concept of the highest political good or perfect justice.

An Indian company, DLF Ltd, was found guilty on Oct 13 2014, of not disclosing complete information in its Initial Public Offering (IPO) of 2007. Great. It takes Securities and Exchange Board of India (SEBI) seven years to figure this.  Let us now look at the punishment meted out to the company – The Company and some of the key staff are barred from accessing capital markets for three years.

In other words, a person walks down to the bank and fraudulently withdraws money from an account.  The punishment for this person is that he must not enter a bank for three years!  Is this not great?  I mean wow!  What a relief!!

The stock lost 30% the next day.  Essentially SEBI punished the investors and not the company.  What kind of a twisted justice is this?

The above incident clearly shows the lacuna in the concept of justice in India.  Organizations and institutions are more happy to be seen to be delivering justice THAN ACTUALLY DELIVERING JUSTICE.

The Law commission is currently in the process of repealing some 300+ antique laws in India.  Come On!  Is this the best that one can do with his / her time? There is no dearth of laws in India - what we need is modern laws and their implementation. Let us say all these 350+ laws are repealed – will it make an iota of difference in our lives?  The average citizen becomes aware of these laws only when the media reports that they will be repealed!

In the concept of Justice as a natural law, Justice is similar to the laws of physics - Newton's law of Motion requires that for every action, there must be an equal and opposite reaction.  Well justice too requires that defaulting individuals / groups to get what they actually deserve.

Theories of retributive justice are concerned with punishment for wrongdoing, and need to answer three questions:

Why should we punish?

Punishment is the infliction of an unpleasant but appropriate penalty upon an individual or a group by law enforcement agencies in response to behavior that an authority found to be in violation of existing laws.

Who should be punished?

The answer here is clear – we punish the company, the lead managers, and all those associated with concealing the material information

What punishment should they receive?

Ah! Here lies the rub!  The answer here lies in the concept of restorative justice.  Restorative justice focuses on the needs of victims and offenders, instead of satisfying the law.  Offenders are forced to take responsibility for their actions and this type of justice shows the highest rate of victim satisfaction.  This concept was eulogized in the 1972 Indian Film “Dushman”

Lady Justice depicts justice as equipped with three symbols: a sword symbolizing the court's coercive power; a human scale weighing competing claims in each hand; and a blindfold indicating impartiality.  Well, the coercive power it is, but the poisoned blade found its way to the wrong person - the investors.

Talking of poisoned blades reminds me of Hamlet and Shakespeare. “This above all: to thine own self be true.”   I wish India wakes up.  Is this what our freedom fighters dreamt of – A hypocritical India?

But, there are no fighters here now, are they? Do you know why?

“Conscience doth make cowards of us all.”

© Nitesh Kotecha

Brother... Where You Bound?

A simple look at the latest developments in technology will give you an idea about a new paradigm coming up in our work environment – substitute technology and remove the human interface.

Researchers and Developers are creating digital actors – yes animated characters so real that one would not believe that the person you see on the screen is a digital creation.  Let’s face it; the dinosaurs have been looking real ever since Jurassic Park (1993) – it is about time we have digital characters who look every bit human.

Major Motor car companies are now incorporating bio-metric signals in the cars so as to assist the driver.  The car would signal a light representing coffee – meaning the driver’s skin is emitting signs of exhaustion or fatigue.  There are minor sensors in the steering wheel which will detect undesirable jerks in driving.  The cars will then automatically reduce their top speed and switch on side sensors which will assist the driver in ensuring his safety.

Stock brokers developed algorithmic trading and now have software in place for such trading.  The manned operations are discarded and the staff given the pink slip.

What is happening?  The above events are just a sample of how technology will soon substitute routine jobs.  New jobs will be created in place as the demand for such technology increases.  And soon those jobs will be replaced with technology and other new jobs will be created.

The above events summarize the need for people to understand that if they are in to traditional jobs, routine jobs, jobs that represent skills that machines can replicate – they need to re-evaluate the career paths they may have chosen for themselves.   Of course, certain jobs cannot be replaced – technology cannot replace a judge or a lawyer at a court.  Politics will not allow technology to replace a cricket umpire! Or an elected representative for that matter!

The current definitions of a business degree will need to undergo a metamorphosis in the sense that future business leaders will see pressure mounting on them as they meet the challenges of such changes in their business.  Curriculum focused only on the administrative side of businesses will need to be revised to accommodate for developing ability in spotting trends.

© Nitesh Kotecha

Top Ten Ways To Eliminate Corruption in India

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© Nitesh Kotecha

India's Junk - Is Anyone Looking? (Part 1)

Guys, Let us look at a junk stock - Resurgere Mines and Minerals.  This shares of this company are promoted heavily by one of India’s top brokers only because they have to distribute this stock to the general public of India.

Below is an extract of the Management discussion and analysis (MDA) from the audited balance sheet. The MDA is supposed to be the director’s discussion with shareholders.

The company has written the MDA by telling you how the world and India is doing in terms of growth.

The company has not offered a single explanation of its financial condition to the shareholders.  Nor has it discussed any aspect of its operations

I am pasting the text below in small font so as to conserve space.  If you wish to read it, copy it and paste it to a word processor and then enlarge the font size.  

This is one more example of the kind of nonsense that exists in India.  We have SEBI pulling up the Sahara Group as the group is visible and a political target.  SEBI  turns a blind eye to hundreds of companies like Resurgere which take investors for a ride.

Can we expect SEBI to be strict with companies like these just like it was firm with the Sahara Group? I don’t know. Can you expect donkeys to fly?

Note the question mark.

© Nitesh Kotecha

Resurgere Mines and Minerals -Management Discussion and Analysis

World Economic Environment

IMF, in its April 2012 update, has projected a World output growth of 3.5% for 2012 against a growth of 3.9% during 2011.

However, projected growth of 3.9% for 2013 indicates a mild recovery. Slight recovery in the major advanced economies, coupled with the solid growth in most emerging and developing economies presents a positive outlook for the Global economy on the whole.

While US economy appears to be on recovery path with a growth of 1.7% in 2011 and projected growth rates of 2% and 2.3% for 2012 and 2013 respectively, the Euro Zone continues to be an area of concern. Its projected growth for 2012 is -0.3% against a growth of 1.5% during 2011. The projection for 2013 is also for a flat growth at 0.7%. In the Euro Zone, Greece which had contracted by 6.9% in 2011, is projected to contract by another 4.7% in 2012, before starting recovery in 2013 along with Portugal and Spain.

Growth in the advanced economies will be slow, projected at 1.4% for 2012 and 1.9% for 2013, primarily because of the ongoing problems in Europe.

As per IMF, the emerging and developing economies would also experience a lower growth of 5.6% into 2012 against a growth of 6.2% in 2011. In developing Asia, China which had grown at 9.2% in 2011 is expected to slow down to 8% in 2012 before recovering to 8.5% in 2013.

Given the overall dampening in economic activity, the trade growth is expected to slow down for both developed as well as developing world. Risk in 2012 is in the form of continued hardening of oil prices. China and India, which together account for around 80% of the incremental oil demand, would continue to push the demand given the pace of their economic expansion. Further, any geo-political uncertainty could trigger a sharp increase in oil prices.

Indian Economic Scenario

 The GDP growth of the Indian economy was estimated at 6.5% for the Fiscal 2011-12. Reduction in gross fixed capital formation and slow down in industrial production have been the cause of concern. No change in the growth rate is expected in the coming fiscal, with RBI projecting a growth of 6.5% for 2012-13. The Union Budget has announced a number of measures to boost the investment climate, with special focus on infrastructure and manufacturing sectors. For the Steel Industry, the key measures are in the form of increasing custom duty on flat carbon steel products from the level of 5% to 7.5%. This along with measures to bring back industrial growth should allow for accommodation of additional supply on capacities likely to be commissioned in 2012-13.

The announcements with regard to reduction in customs duty on machinery imports for mining and mineral sector, specially for iron ore beneficiation and pelletisation, will lead to reduction of overall capital cost.

Forward-looking Statement:

This report contains “forward-looking statements” – that is, statements related to future, not past, events and may be interpreted as ‘forward looking statements’ within the meaning of applicable laws and regulations. In this context, forwardlooking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should” or “will.”

Forward–looking statements by their nature address matters that are, to different degrees, uncertain. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the company’s operations include a downtrend in the iron ore, bauxite, steel, pig iron, soapstone, & met coke industry – global or domestic or both, significant changes in political, economic, business, competitive or regulatory environment in India or key  markets abroad and from numerous other matters of national, regional & global scale including but not limited to natural calamity, tax

laws, litigations, Government policies & regulations, fluctuations in interest and/or exchange rates of Indian Rupee, etc.

Any forward-looking information in this report has been prepared on the basis of a number of assumptions, which may prove to be incorrect.

This report should not be relied upon as a recommendation or forecast by Resurgere Mines & Minerals India Limited. The views expressed herein may contain information derived from publicly available sources that have not been independently verified; no representation or warranty is made as to the accuracy, completeness or reliability of this information. We do not undertake to update our forward-looking statements.

Global iron ore industry:

Iron, the fourth most abundant rock and constituting about 5% of the earth’s crust, is the world’s most commonly used metal. Global iron ore deposits are estimated at 800 billion tonnes, containing more than 230 billion tons of iron. Iron ore is mined in more than 50 countries and the world’s largest iron ore producing nations are Russia, Brazil, China, Australia, India and the US.

World Steel Scenario

The Global Steel Industry is going through a rough phase with demand declining and the major steel economies like USA and Europe running into oversupply. The World crude steel production in 2011 stood at 1518 million tonnes, growing at 6.2% over 2010, with China contributing as high as 52% to the incremental production. The growth rate however, was considerably lower as compared to 16% in 2010.

The Global steel demand during 2012 is expected to grow by 3.6% to 1422 Million Tonnes, moderating slightly as compared to a 5.6% growth in 2011. It is expected to grow further by 4.5% to around 1486 million tonnes in 2013, as per WSA forecasts. Demand in major steel producing nations, viz. Japan and Europe is projected to increase in 2012 as compared to the demand in 2011. In the US, demand is forecast to grow by 5.7% in 2012 and 5.6% in 2013. China’s growth in steel demand

in 2012 and 2013 is expected to moderate to 4.0% following 6.2% growth in 2011. The continuing slowdown of Chinese steel demand is mainly driven by the Chinese Government’s efforts to restructure the economy. However, part of China’s projected slower growth is offset by improvement in other emerging markets and the recovery in US.

India is expected to resume its high growth trend after a sluggish performance in 2011. In 2012, India’s steel use is forecast to grow by 6.9% to reach 72.5 MT and is projected to grow further by 9.4% in 2013, driven by increased infrastructure investment and higher pace of urbanisation.

WSA forecast suggests that in 2013, the emerging and developing economy will account for 73% of World steel demand.

Indian Steel Scenario

India maintained its ranking as the 4th largest steel producer in the World with a production of 71.3 million tonnes in 2011, registering a growth rate of 4.4% over 2010, as per WSA. According to JPC estimates, domestic finished steel consumption posted a growth of 6.8% during 2011-12 to 70.92 Million Tonnes. The World Steel Association has projected a growth of 6.9% for steel consumption for India during 2012, which is higher than the growth in steel consumption projected for China (4%). In 2013, the growth rate is forecast to accelerate to 9.4%.

Financial performance – operational performance

With the Indian Economy reeling under the collateral impact of a sovereign debt crisis in Europe and frequent increases in domestic interest rates to rein in inflation this Fiscal, the growth rate of real consumption of domestic steel in the currentFiscal also witnessed a slow down as compared to last year.

The summary of financial performance of the Company is presented below:

(Rs. in Lacs)

Particulars FY 2011-12 FY 2010-11

Total Income 7,670.57 65,171.68

Profit / (Loss) before Depreciation & Amortization (1,531.34) 3,331.38

Less: Depreciation 2,274.08 1,928.25

Less: Amortization (Including Goodwill) 3,912.49 2,682.58

Profit / (Loss) before tax (7,717.91) (1,279.45)

Less: Provision for taxation 3.31 317.94

Profit / (Loss) after tax (7,721.21) (1,597.40)

During the year under review, the company’s total income is decrease by 88.23% compared to the total income from the last year and company has incurred a loss of Rs. 7721.21 lakh during the year under review.

Mining overview:

India’s GDP growth was catalysed by the mining industry; every rupee invested in the mining industry generated Rs. 2.4 of output (directly or indirectly) in the country’s economy. Mining contributed about 2 per cent to the country’s GDP (source: Central Statistical Organisation).

Lessons From Nokia – The Customer Cannot Be Damned!

What was the most successful European company of the 1990s?

Easy. The Finnish mobile phone manufacturer Nokia Oyj.

And the most disappointing one of the 2000s?

Easy again. Nokia.

Nokia is in the news lately.  It is probably up for sale.  Samsung has given it the thumbs down and Microsoft is discreet about it.  However, this blog is a part of a series of articles on what we may learn from Nokia and how they brought about their downfall.

Nokia did not respond to the Market and the Customer.  This is a violation of everything we learnt in Marketing 101.

Nokia was so focused on sameness that it assumed that a Nokia user either calls people or sends a text message.  There is not much variation between the Nokia 6600 (2003-2004) and Nokia N8 (2010).  By variation, I mean not in terms of how the camera graduated or the processor evolved.  Look at the basic layout of the Symbian Operating System in both the cases.  There is nothing exciting about it.

Nokia cell phones did not have the ability to block a call or a text message.  One had to resort to expensive apps.  How could Nokia not have figured this out?

Well only one way – “The Customer be damned.  We are Nokia”.

Nokia had this huge range of cell phones that essentially did the same thing.  This is a con, on the consumer, who is now under the illusion that there is a wide range of the Nokia cell phones available as a choice.  Have we not heard before that “Less is More”.  Look how Apple is handling its range.  It is focused and concise.  Samsung is doing what Nokia did – throwing out this huge mindless range of cell phones where there is not much of a difference in what the cell phone does.

Nokia cell phones were expensive.  People paid top dollar for it.  Should the company not have focused on delivering value to the customer?

© Nitesh Kotecha

The Well Is Not Interested In Your Thirst

A well is filled with water.  However, it is not interested in your thirst.  You have to get the rope, the bucket and the wherewithal to access the water and quench your thirst.

Any pursuit will require initiative.  Here are the characteristics or mannerisms that indicate our ability to take initiative:

Becoming a self starter – A person with high initiative is a self starter.  He does not wait for problems to push him.  A leader sees a situation and takes control of the situation WITHOUT SPECIFICALLY BEING ASKED TO DO SO.  He sets the ball rolling.  A self starter need not be dictatorial or dominating.  He needs to clear the dust so that further action can be taken.

Contagious – A person with initiative is the envy of all.  Not only is this person proactive in terms of action, he is also contagious in the spirit of the matter. The high initiative on display unshackles the chains that bind others and propels forward a spirit of enthusiasm.

Independent – A person who takes initiative is independent of the mindset of other people.  Our ability to take initiative comes from our conviction of the relative importance and relevance of the matter at hand.  The person with initiative has the necessary nerve to take action, despite all odds.

© Nitesh Kotecha

The Title Trauma

This incident happened to a friend of mine.  His production in-charge was due for a raise and review.  The manager insisted that irrespective of the rise in salary, he now wanted the post of “President - Operations”.

The fact of the matter is that he was the boss of the department.  He has two assistants and then there were the labor.  The fellow had joined my friend's  organization by retiring from the post of “Vice -President” and so he wanted to look good on the resume by an apparent "President" Title.

Here is the issue.  Why are these executives crazy about the post titles?  I am not planning to throw a Robin Sharma on you here with this question. I would like to approach it differently.

An executive is a person who, by virtue of his knowledge, skill, or capacity, contributes in such a way that he or she positively affects the capacity of the organization to perform and to obtain results.  In this sense, just about every person is potentially an executive.  There may be some who approach their task in a lackadaisical manner but let’s leave them aside.

A higher title in an organizational hierarchy must result into an enhanced potential for strategic decision making – and the person must be equipped to take those decisions better than anyone else suitable  for the job.  The higher title must have more latitude and be more empowering.  Under these conditions, a higher title is desirable and may be sought.

In sum and substance, a blue collar worker is an executive too.  The scope of his work and the latitude in decision making may be limited – but I don’t see this fellow any different from the CEO of a company.


The idea is to be effective and have an impact.  Nothing less.  Other than that, a title for namesake is a trip to fantasy land via the vehicle of self deception.

Copyright © Nitesh Kotecha

Move Beyond Personal Growth

A need for leaders in a group is to have the ability to move beyond personal growth.  What are the conditions that will not allow a person to embrace the ability to support others?

Insecurity – Insecurity can permeate any leader on any competitive point.  Insecure leaders put checks and controls on the team under clever disguises.  They complain about insubordination, prior approvals and the like.  Insecure people feel vulnerable and look inward - and this coerces them to restrict the development of the potential of his team.

Trust Issues – A leader, especially an inexperienced one, will have trust issues in a group.  The ability to foster a spirit of trust is the hallmark of a leader. Humans are naturally disposed to trust and our ability is marred by bad parenting, conditioning in schools and media related negativity.  Trust is integral to our area of influence while biases and prejudices developed from the social environment chip away at our ability to work and lead.

Commitment – The cultural messages that we get from our mythological stories stress the fact that small things done consistently carry more value than loud actions take sporadically.  The leader’s commitment to bringing out the best in the group requires consistency in thought and action.  The behavior and tone of the leader must demonstrate this commitment.

The leader has to commit to various leadership roles within an organization.  Bringing out the best in others will require a mindset that will allow, on one hand, the leader to assert his position in a group in, say, managing a subordinate’s behavior in the presence of the group while supplementing his own goals for growth and development.

Copyright © Nitesh Kotecha

Do You Collaborate?

Most of us, by nature do not collaborate.  However, I would like to qualify this assertion.

What is the probability of a group of people collaborating with each other on a train journey?  Or on a trip?  I would say that there is a good probability for a conspicuous amount of collaboration.  However, the collaboration that we normally exhibit in such situations takes a back seat in an organization.

Why is our employment in an organization not a journey?  Why do we not think of it as one?  Answers like organizational structure and dynamics are antique.  The change in the situation from a relatively riskless (and a fixed time frame) one to an ongoing and challenging one alters our behavior and approach.

The Bhagvad Gita extols steady wisdom in the Sankhya yoga.  Collaboration stems from a determination to work together towards a goal.  The determination to work together is rooted in the ability to remain steadfast.

Here are certain strategies that may be employed in order to enhance our collaborative nature:

1)       It is suggested that one be trained in the RIGHT skills.  Collaboration would entail reasonable command over people skills and the ability to manage your own behavior.

2)      Conflict can never be personal.  Every organization or every decision making hierarchical order may have at least one certified ignoramus who may have a personal or a hidden agenda.  The ability to steer the communication away from such agendas and refocusing on the issue at hand is a prerequisite for collaborative teams.

3)      The leader must assist the members in getting to know each other so that a deep collective determination develops as a part of the work environment.  People who know each other collaborate more.  The leader must invest time in social events and other forms of networking for his team.

4)      The leader must have the vision to manage and reinterpret the rewards that the team may receive.  This is the most vulnerable moment for any team.  Promises await those teams who can successfully handle success.

5)      Communication in the team must be purposeful.  Gossip and other trivial discussions create perceptions and these perceptions may interfere with our ability to know and relate to other people in the group.

6)      Mahatma Gandhi suggested that“be the change you want to see in the world”.  The leader must demonstrate his ability to collaborate and model that behavior across situations.

Copyright © Nitesh Kotecha

The Fox Will Kill The Lion

AltaVista was the world’s most popular search engine by 1998.  The site had recorded 80 million hits a day in 1997.  Yahoo! Inc, via Overture, bought over AltaVista.  AltaVista died and Yahoo! lived.  Google came in and as of today Yahoo! is up for sale.

What does all this mean?  AltaVista set up the multi threaded crawler – the ability to search more web pages than were believed to exist at that time.  What happened to AltaVista’s drive and ambition to remain at the top?  Why did Yahoo! take over and why is the same Yahoo! up for sale today?

Leadership of the fox kind is the key.  There is no way that a fox can fight the lion – certainly not in the traditional sense of jaws and paws.  It is only a dumb competitor who would fight the mighty with tools that yield a competitive advantage only to the mighty.  The fox would challenge the “institutional skills” of the lion and instead rely on his “strategic resources”.  This would necessarily include an opportunity where the lion displays a “weakness” and the inability to fight back.

The above allegory summarizes what happens when the young and the fresh challenge and take over those with power over them.   Failure to focus on strategic leadership and its eventual result of strengthening the competition is well documented in business history.

The question then is what prompts one to take advantage and make better use of an opportunity while the mighty sit back and look on?

The motivation to supersede and win, despite the presence of market heavyweights, along with dissatisfaction with the status quo seems to be the basis of this leadership.

This attitude influences creative output as one is suddenly focused into the task at hand.  There seems to be fireworks not just in our ability to concentrate but also in our capacity to take risks. 

Motivated individuals are able to override programmed modes of thought in order to reflect critically and positively on the situation at hand.  I am sure this also has a lot to do with the ability to find meaning in a task.

Google is the world’s number one search engine.  Google became number one as the promoters were interested in a search engine that ranked websites in terms of importance and quantity of pages rather than the number of times the search items appeared on the page.

Google knew why they had to do it before they knew how they would do it.  The entire motivation seems to stem from altering the status quo and creating new ways of handling resources.

To end the allegory –

a)      The fox does not worry about claws and paws

b)      The fox does not feel the need to fight the lion in the traditional sense

c)       The lion is the king of the jungle and is fixed in his methods

Google is the Lion today.  Here’s to Google – Have a foxy day!

Copyright © Nitesh Kotecha

Keep Going and Find Something Better to Do

David Packard, the co founder of Hewlett Packard always said that he was a human being first and CEO second.  He was a very quiet man and avoided publicity and limelight.  He is quoted as saying “You should not gloat about anything you have done; you ought to keep going and find something better to do”.

There are some lessons here.  Keep going means we cannot rest on our laurels.  This is a trap.  There are many celebrities who have ruined their lives only because they were too proud of their achievements.

Nature has shown that every great invention has been refined and improved upon.  There is nothing in this world that is so perfect that we cannot improve it (well maybe not with the Mona Lisa Smile – but you know what I am talking about).  Thus we may savor the moment of our success and glory but it would be prudent to heed the words of David and see if we can improve upon our last achievement – before our competition does!

Finding something better to do symbolizes that there is always a higher value that we can achieve and aspire to.  An author can write a book and enjoy his new found celebrity status.  However, finding something better to do would mean that the author must now go beyond his last work and once again challenge himself.  The same would apply to a sportsman, a student or a businessman.

There are many benefits to what David advised us.  It improves our relationships across all levels, reduces anxiety and stress, encourages an open approach and attitude – and as paradoxically as it may seem, it enhances one’s self-confidence.

Copyright – Nitesh Kotecha

Are You A Gentleman?

"You can see whether a person is a gentleman or not by seeing how he treats those who can be of absolutely no use to him" – as the saying goes.

We all know how we treat those whom we need or have use of.  Why does a person mistreat, ignore or be otherwise indifferent to those who can be of absolutely no use to him or her?  The root of the behaviour can be safely generalized to the absence of humility.

On a detached and spiritual level, humility as a quality allows us to consider our own defects, be modest in how we describe ourselves and be conscious of the higher powers that may be. If I were to define humility, I would say something like this - "Humility is the quality of being courteous and respectful to others."

This working definition of humility does not qualify what “others” means - and this lack of clarity seems to allow us to be selective about our humility and our disposition.

Indians are conditioned to a phrase - "Your Humble Servant". This is ridiculous. This is a hangover from the Princely and the British era where humility was confused with servility.  Humility is about maintaining our pride about who we are, what our accomplishments are, our self worth - but not about how superior we are to others.

I have always maintained that the higher a person rises in terms of knowledge, wealth, status, power, etc - the more humble a person must be.  Humility means that you are aware of your achievements that have given you knowledge, wealth, status, power, etc – but there is no arrogance.  We all admire people with these traits.  Our admiration for these people does not come from acknowleding their achievements but rather from the absence of arrogance.

There are mountains of materials on leadership.  Management text books go about describing leadership in all its managerial aspect.  However, to lead you must have someone to follow - and nobody follows arrogance.

Copyright - Nitesh Kotecha

Effective Managers Are Not Necessarily True Leaders

Effective Managers and True Leaders differ in their

a)    Management Style – Good Managers limit their concerns to the day to day complexities of an organization, while true leaders orchestrate important changes in the organization.  For example, true leadership goes beyond management’s responsibility of planning and budgeting routines, structuring the organization, staffing and monitoring activities by creating a vision for the firm and inspiring individuals to reach for that goal.

b)   Management Traits – A good leader posses a drive, that is, a high regard for achievement and are constantly striving for improvement.   Secondly the good leader exerts leadership motivation – they show interest and desire to lead individuals.  In addition, a good leader ins concerned with his or her integrity, shows self esteem and finally has a high level of knowledge about the industry or company he or she is working for.

c)    Management behavior – A good manager’s behavioral approach centers  on task performance (getting the job done) while good leaders also focus on group maintenance and the concern over their follower’s participation in decision making.  A good leader exhibits behavior that demonstrates concern towards a group as a whole and towards individuals on a personal level; they express concern over areas such as trust, open communication, mutual respect and royalty.

In order to succeed in establishing a positive atmosphere and a culture where employees are encouraged to thrive, it is essential that managers go beyond good management and become great leaders

Source: Bateman and Snell (2007)

Your Broker As A Cheat (Part 2)

There are many reasons why your broker would recommend a stock to you.  

However, the reasons may not necessarily conclude that you are making a prudent long term or a short term investment.  In fact the recommendation may come to you only because you have an account with the broker and that you have cash – and that you are financially dense.

Your broker may have invested in the stock for his other clients, or for his family or for herself.  The stock may not be performing well.  The broker is now experiencing stress and cannot decide her current condition.  The stock is not performing and the broker’s reputation is on the line.  Our internal state of harmony is challenged if she is to conclude that it was a bad stock.

It is at this moment that you ask your broker about a good stock and pop!  She just names the stock that she is stuck in.  Your investment in this stock not only induces conformity in your behaviour – the broker also feels good that money is pouring into the stock.  She now does not have to think that she could be a certified dud.

Your broker could be hand in glove with the main broker at the exchange and there could be a mutual understanding between them to encourage retail participation in the stock thus allowing the company and its operators to offload the stock.

Now, depending on the stock, you may book your losses at some 30% to 40% loss.  This is the time the company and its operators pick up the stock again and look around for fresh idiots to fall prey to the game.

Some stocks in this category are Prakash Industries Ltd, Shree Precoated Steel Limited, Sturdy Industries, India Lease Dev, Shree Rayalseema, Anus Lab, Zyden, Arvind Remedies, Karuturi Global, Alok Ind, Assam Co  and similar certified junk.

Please note that such a game plan is first initiated by a good looking “Research” Report or some model portfolio gibberish.  Your broker will produce such a report before you in order to add authenticity to an otherwise junk proposal.  If you are greedy, you are game.

A giver is a person who gives, a donor is a person who donates and a broker is a person who gets you broke!

In dealing with brokers, it may pay to heed to the words of Alexander Pope:

Be wise,

Be discreet,

But mark that point,

Where sense and dullness meet.

Happy Investing !

Copyright – Nitesh Kotecha

True Empowerment

Empowerment has been the major thrust in management philosophy.  Empowerment at work is the availability of opportunities at the work place for the employees to be able to make their own decisions about their tasks at work.  Many business houses are practicing empowerment with their employees in order to offer better opportunities at work and to create an environment conducive to employee satisfaction.

Empowerment entails, amongst other things, some autonomy.  There are many theories and much research material on empowerment.  However, it believe that true empowerment lies is a superior’s ability to manage himself WHILE HIS SUBORDINATE is exercising autonomy.  The degree of autonomy may vary as per time, place and the situation – but autonomy remains at the core.

The “trust deficit” and the negative fantasies of “existential risk” in the superior’s mind strike at the heart of true empowerment.

The success of any organization depends on the ability of its organization structure and management to empower the lower hierarchy.  This is a given.  However, the flip side to this statement is that the success of any organization depends on the ability of its organization and management to

a)       Trust their own HR department about the quality of the employees that it offers positions to

b)      Trust the organizational structure and its systems of checks and balances

c)       Trust themselves and replace their insecurities and fears with a positive mindset

True empowerment fails when the above core ingredients are missing


Copyright - Nitesh Kotecha

Negative Feedback Can Be Nourishing

Our concept of our self may, at times, prevent us from accepting feedback that works against it.  We may form mental images of ourselves that may, over a period of time, drive us away from reality.  We may thus experience dissonance when we receive negative feedback from our work or home or from the social environment at large.  Businesses can get arrogant and forget the basic fact that a business is a business only because there is a customer.

We may wonder what kind of a sequence of thoughts or events take place before this non-acceptance of negative feedback or arrogance creeps in to our system of thoughts and behaviour.   I was scratching my head over them and here are my thoughts:

Failure is built in to success:  Success can be a real enemy.   Success can cause blindness and complacency.  The euphoria accompanying success can create an impenetrable wall that can block all the synapses through which we connect to the world and experience reality.  The ability to challenge oneself, introspection and humility are the only antidotes to this trap.

Pride comes before a fall:  As clichéd as this proverb may sound – it rings true.  Pride is the culmination of our self concept of infallibility.  The inflated sense of our accomplishments blocks our ability to accept negative feedback.

So how is negative feedback nourishing?  Well, this depends on our ability to generate action as a result of the feedback.  We have to differentiate the roles that we play in our lives with what we are as a person.  This crucial separation is what may be required so that we may not gather rust. The basis of this crucial separation comes from our language and daily communication.

Copyright – Nitesh Kotecha

Your Next Three Years

Why would you want your next three years to be like the last three years?

I see this as a pertinent question.  Inability to embrace change could be a reason.  This question can have us tossing and turning in our heads.  Let us look at this.

Are we change- ready?  A pre-requisite to being ready for change is level of self-esteem the individual has.  Let us not confuse self-esteem with pride.  Self-esteem is derived from experiences and by being effective in at your work place.

Are you motivated enough to embrace the change that may occur?  Do you have that fire in your belly that will motivate you and propel you forward irrespective of the fact that you may be out of your comfort zone?

Change occurring at an individual level requires you to communicate effectively to those who have emotional investments in you.  In case you are in an organization, change becomes a team effort.  Performance can come under risk depending on how change “occurs” in each member’s frame of mind.

Management Guru Deming talked about driving out fear from an organization.  Fear, whether at the organizational or at a personal level, is immobilizing and reduces our appetite for change.  Fear encourages us to avoid speaking assertively, risk taking and finding path breaking solutions.

This idea now takes us to another question “What would you do if you had no fear?”

Let us leave its answer for another blog!

Copyright – Nitesh Kotecha

Have Fun At Work

Advertising Guru David Ogilvy once said “Make it fun to work at your organization.  When people are not having any fun, they seldom produce any goodwill”

Work ought to be fun; otherwise we may be wasting our lives.  Here are some rough guidelines to add some fun...

1.  Create a risk free environment:  People make errors at work.  However, people cannot be afraid of making errors, as that is worse than making errors. 

2.   Micromanaging – Steve Jobs was a micromanager.  He demanded total control.  However, we will never hold him to ransom as he was never the businessman.  More of an artist, I would assume.  Artists behave like that.  If you have hired people to do their job, let them do it.

3.   Passion – allow people to feel their passion at work.  Feedback need not be brutally honest.  Tactful and Barnum like statements can assist you in encouraging them to move on without feeling dishonest

4.   Perfection – We have to stop waiting for perfection.  Our potential as a leader depends on not just the team but the situation too.  We may never know when one of our subordinates may show leadership and in what situation.  However, having a fun work environment may be a prerequisite.

Copyright – Nitesh Kotecha