Convocation Speech

Convocation Speech: IIM Calcutta, 1^st April 2007

Let me start by telling you a modern tale:

Five private equity funds get together to buy a large international steel company. The seller states his price: he wants half the money that the first fund has plus all the money the other four have. He gives them other alternatives as well: he will sell his company for a third of the second fund plus all the money of the others, or a fourth of the third fund plus all that of the others, and so on.

The question is: what is the price the seller wants for the steel company and what size fund does each private equity player have?

Those of you who are mathematically inclined will recognize the problem as one of solving a set of indeterminate equations[1].

Those of you who are students of history will recognize this as one of the many problems from the Bakshali Manuscript[2]. This manuscript, written on pieces of birch bark, was found by a peasant in 1881[3] in a village called Bakshali near Peshawar. It is written in a language that was a precursor to Sanskrit[4] and has been dated as from between the 2nd century BC and 2nd century AD[5].

In the Bakshali manuscript, it was five merchants who set out to buy a jewel and not five private equity funds to buy a steel company. But otherwise, the formulation of the problem and the method of finding the answer is the same.

I can see from your faces that you are all eager to go on to the real world of business. I want you to remember that the Bakshali manuscript serves as reminder of the great intellectual tradition you come from.

In 1971, I remember waiting in cap and gown, like you wait today, eager to receive my diploma and set forth to conquer the world. It was on a day much like today, the romantic Calcutta winter had receded into memory but the dog days of May had not yet set in. But it was different in other ways. There was the sound of guns outside, some from a distance, some from quite close. They served as a humbling reminder that though we were armed with the latest tools of operations research and psychology, there were fellow citizens outside fighting more basic battles. It was the peak of the Naxalite uprising. The government, desperate to find a solution, called an Election. The usual election officers, the state and central government employees were wary of volunteering so they called for students. I was eager to contribute to a solution to the strife and volunteered for election duty.

Thus I found myself, Sonagatchi, the red light district of Calcutta, soon after graduation assigned the job of marking indelible ink on the fingers of voters while guns went off all around us.

This is why I have boasted for years that I have held hands with most of the sex workers of Calcutta.

As I stand here today it is quiet outside. The social battles of the 1970’s seem so far away and quaint.

What is different in today’s India compared to when I graduated in 1971?

I suppose the e big difference is that the world’s macro economic factors have swung India’s way.

It started with the Western world’s information technology industries developing in the 1990’s an insatiable demand for low cost English speaking manpower to convert billions of lines of computer code that had been patched together in the early days of the computer industry. India luckily had large numbers of such programmers idling because Indian trade unions at that time would not allow computers to be introduced[6]. Smart entrepreneurs seized the opportunity to ship these programmers abroad and moved on from there to build IT services companies that are now the envy of the world[7].

This labour cost arbitrage[8] opportunity has continued. Western financial service, health care and customer service industries have started a transition from a craft mode to an industrial mode. During this transition, they need a large supply of reasonable skilled, low cost, English-knowing workers. Low telecom costs [9]have made it possible to serve this need long-distance from India[10]. When that transition is complete[11] the arbitrage opportunity will disappear but that is still some time away[12].

A second fortuitous wave that is propelling India farther forward- the tremendous liquidity surplus in the world. Capital today is gushing out and finding its way to Indian equity markets, into real estate, into almost anything that you can name.

But big questions stare us in the face and yours is the generation that will have to find the answers to these questions.

What if the rupee that today trades at about Rs 45 to a dollar goes to Rs 20 or even Rs 10 per dollar in the next decade[13]?

What if the current excess liquidity situation in the world tightens and capital becomes risk averse and expensive[14]?

What if millions of our countrymen say we too want to be part of this Shining India[15] that is currently available only to the sons and daughters of people already in the middle class[16].

Remember, one day, one of you will be invited to make a Convocation Speech just as I have been invited today. If it takes the same time it took me to be invited, it will be the year 2040.

By that date, some say[17], India’s GDP in US$ terms will exceed not only the European countries and Japan but also perhaps the United States.

But what these reports also say, and this part is often overlooked, is that in 2040, , India’s per capita GDP will be just 15% of that of the United States and a third of that of even Russia.

Another way of putting it is that even thirty five years from now, the average Indian will earn just Rs 5000 a month. On this income he will have to feed and educate his children, look after their healthcare needs, afford entertainment and life insurance. This means he must have a place to stay with clean water supply at say Rs 200 per month,[18], un-interrupted electric power perhaps at 50 paisa per unit at the consumer level, medical insurance at say Rs 10 per person per month and Life insurance perhaps at Rs 5 per person per month.

If we have to achieve this we need to convert our economy to one that has the lowest transaction and transformation costs[19] in the world.

These seem impossible targets to achieve using the current management methods and present economic institutions. We need to devise new paradigms that achieve these targets without any subsidies, and one that allows businesses that provide these services excellent returns on their capital.

In finding answers to such challenges, in the past, all of us in Indian management have borrowed paradigms from the west and force-fitted them into the Indian situation.

For example, we often hear calls for reducing “labour rigidity” in India. Every such call should remind us that we are trying to force fit Henry Ford mass manufacturing system to India. We forget that this paradigm[20] assumes a social system in which business cycle down-turns can be dealt with by lay offs and production cuts. It assumes both a labour shortage economy where people who are laid off quickly find jobs and a social security system that pays you for the time in between jobs.

Similarly, when people cry to “improve quality” as a panacea for competitiveness problems ,they forget that the Six Sigma Quality paradigm was developed by Deming[21] in the context of the 1960’s Japanese consumer electronics boom[22]. It works very well in industries like electronics and auto where efficient assembly is the key to success. Transplant it to creative software product development, for example, and it becomes merely a marketing gimmick and makes little difference to results[23].

Finally, a third example, the much admired US National System of Innovation[24] as it applies to the healthcare industry. We forget that it assumes a State[25] that lays out vast amounts of money in research, allows private companies and individuals to own the patents that rise out of this research, employers who bear the cost of the resultant high-priced health care system. US companies in the older industries[26] find themselves in an impossible situation today and American business and political leaders are desperately trying to find a way out of this debilitating system.

In a few years many of you will head large corporations and will be responsible for producing the vast array of products and service that our fellow country men will need. Others among you will hopefully join academics and contribute to theory. Whatever you do, please remember the inheritance you carry within you and the obligation that you owe to your less fortunate countrymen.

Please remember that each management paradigm[27] has its societal context and cannot be that easily borrowed. Original management paradigms[28] to address the Indian challenges have to be developed and it is your generation that will have to do that.

Be inspired by the early examples that demonstrate such a possibility:

The Aravind Eye Care System that treats over 1.4 million patients each year, two-thirds of them – or almost a million patients – for free is often cited as an example. They apparently succeed because they have improved surgical practice and invented low-cost eye implants.[29]

If you succeed in doing this[30] you will release a tsunami-like demand that will not only create jobs for the millions coming on to the job market but also allow them to live a fulfilled life in which life’s necessities are within their reach.

If you succeed, Indian managers and management theory would have made its own unique contribution to the world and you will personally have lived a worthwhile life.
Our ancestors have been doing cleverer things and for very long. The Bakshali Manuscript is evidence of this.

If you occasionally wonder whether this immense task is within your talent, remind yourselves that you come from ancestors that created the Bakshali Manuscript. If you ever doubt the power of ideas to transform the world, be inspired by the Bakshali Manuscript- it’s written on crude birch bark, the language in which it is written has been long extinct, but the power of its methods is relevant even today.

Thank you very much for inviting me today- I wish you all a very successful management career.

Nice speech, 40 years from now, well, long way off. One year more, lots to do, and it'll be done.

Cricketing Superheroes, Media Monkeys and Fundamentalist bastards.

Oh well, another world cup. We are out already and the media is busy investigating who is to blame, and people who've hardly accomplished anything in cricket are voicing opinions about Sachin, who probably has done a lot more for cricket than all the rest.

India had won like 3 out of 12 matches played abroad in the 15 months before the world cup, the team was never good enough to win. The media monkeys hype it all up, well they have to sell, and we think they are going to win. The kiwis/Sa are way too good, lanka could do a surprise with mr jayasuriya defying age, like golden Glen.

India were not good enough to win, but they were not bad enough to get out so soon. I did bet on India losing to them ( hey jigs, u gotta listen buddy), but that was because everything was going wrong for India. We made abrupt team changes, changed tactics too often, and a hardworking team, that was more focussed was going to beat us.Remember France-Senegal, 98, (i had bet on that as well).

In the context of what the team achieved, i'm sad, like everyone else, but thats i don't think we need new coaches, new teams, new players et al, thats ridiculous.


Replace Sachin ? With whom, raina or kaif ? Agreed hes not the player he used to be, hes become very boring, and hes never really played in crunch matches, his recent record is still "dcent" enough. A raina, or a kaif will do worse, you can't replace him unless theres someone else who deserves a place in the XI, and when theres someone, there is no argument.

People need to get some perspective, you can't really believe everything the media prints and so called experts say, India were bad, and to add they under performed, and in sports it happens. We expect too much out of them anyway, next time we scream at them or swear at them, lets ask if we ourselves always perform miracles all the time.


Sampras'/Schumachers'/Ali's, all have been through difficult times, and if this is how we react to them now, we should not expect any comebacks from our boys.If they continue to under perform and still are being selected, theres something wrong with the system, so fight that, don't break players houses or burn their posters. They are human too, and they are representing us, they may not win everything, and get humiliated at times, but they are still our team, if we don't cheer them up to fight, who else will ?

The only reason they can do endorsements are because people watch, they need money like everyone else. I've heard so many illogical comments about how players should be banned from commercials et al. Its as if people don't like to many money, hypocrisy is prevalent in this country as stupidity, theres nothing wrong with anyone encashing on his "value" in an open market.

I hope the boys in blue bounce back, once they start winning, the same voices which are calling for their heads will start worshiping the reborn heroes again.

I had to add this as appreciation of how the media makes it easy for people to recognize how much shit they are made off, Newspaper reviews of the move 300, were, " worth watchin 300 times", "magnificient" et al, now that was probably the most bullshit you can fit in one movie, and if this is how the monkeys feel about it, you know its worth not reading/basing ur opinions on.

Election time again, it'll nice to see anti-incumbency playing tricks again, the SP anyways has too many cracks now. Somehow, i agree, with a Gandhi as the PM, the "fundamentalist bastards" would not have desecrated the Babri masjid, the planning that went behind it, the legal loopholes used to its advantage are worth reading just to remind you, how far people can go in the name of hate, or well, watch final solution, its even better.


Come what may, i hope they don't get any slice of the action, as i've written before, i prefer political scumbags to "fundamentalist bastards".