Low Aim is a Crime!

This is take on being satisfied with Money earned rather than going up the value chain!

India got its independence in 1947. India missed the industrialization bus by a century because British allowed only a few benefits of industrialization to percolate to India.  Before independence educated Indians were interested in working for British, whatever work they could get, mostly they got clerical jobs; those were the only real jobs available anyway! British chose the people for senior admin positions and made them brown sahebs. These proxy Britishers were more British than the Britishers themselves.

This scenario put India under the gloom of disease of getting satisfied on achieving small things and doing mundane things. This led to metastatic mentality of under achievers; those who were trying to do something different were looked down upon and discouraged from doing anything different. Some of us from our generation were able to improve on this thought process and later generation became even more active and started taking risks.

IT sector was the first sector where India did pretty well, financially. Y2K issue was the one that gave impetus to Indian IT sector; middle class started growing faster than ever and large Indian populace started having money, living in foreign countries for work and started buying their own homes in a big way. This of course combined with official opening of Indian economy in 90’s. Effect of higher salaries in IT sector was seen in other sectors like engineering, pharma, finance and so on. But this success hid one thing from general populace and even from IT sector that the “great” work that we were doing was actually mundane work done for others as a service. This model kept on working well till about a couple of years back. Then the signals started coming that the mundane work that was outsourced to India can be automated so….

Circa 2017! Large Indian IT companies are sitting on big pile of US Dollars. This indicates their past success, financially. But it appears that these large “successful” companies were run more by accountants than by entrepreneurs! So they have made big money, hundreds of thousands of millions, many of them in dollar terms. But since the scenario started changing a couple of years back, it is obvious that if you don’t move up the value chain, you are going to come down as fast as you have gone up! The fact that these companies are sitting on a big pile of dollars shows that our mentality of mundane “services” type of work has not changed. This pile of money should not have been there; it should have been invested in going up the value chain! But even today this money is being used to buy back shares! The big bosses have not thought in terms of creating own IPR’s or products in any field, IT or Engineering or Pharma! When “services” are generating money why bother.

To give an example of how things are changing, when you “talk” to say Amazon on chat about some issues, the “Ravindra” or “Asha” who is taking to you may be a “BOT”. What is a BOT? An Internet Bot, also known as web robot, WWW robot or simply bot, is a software application that runs automated tasks (scripts) over the Internet. Typically, bots perform tasks that are both simple and structurally repetitive, at a much higher rate than would be possible for a human alone. The largest use of bots is in web spidering (web crawler), in which an automated script fetches, analyzes and files information from web servers at many times the speed of a human. More than half of all web traffic is made up of bots. (This is Wikipedia definition of BOT)

How this is typically done is very similar to self-check-out counters in big departmental stores. At these check-out stations, for a group of ten such stations there is one supervisor helping, if you need any help. So what this system does is, instead ten people manning ten checkout stations, one person is sufficient. These BOTS also do the same thing. Now do you understand how the nature of business is changing? If your business is dependent on someone else’s way of working, you are in trouble if automation comes into picture.

What is the way out? Going up the value chain; but if you are a company with 100 to 150 thousand employees with “service” level skills you have tough task on hand. Basically it’s a tough call for the senior management to change its own ways from accountant based running module to technologist based running module. Who runs highly successful companies? Apple, Facebook, Microsoft, Google, Nvidia, you just list such companies and will see that these are technology driven companies. Yes, finances are very important but if the company is run by accountants they will never take risks! But when you don’t take risks and try and don’t keep abreast with new technologies or create new technologies, you will never know what hit you! How many of us know that Google and Apple are spending big money on Car technology, and they are creating newer technology in cars which was never even thought of. Nvidia is already a big auto system vendor to VW’s, Audis and Mercs of this world. They have invented technologies which are forcing these Auto giants to use new technologies to remain competitive in business. Elon Musk of Tesla had the audacity to start making Electric Cars and even start making space vehicles using venture capital.

Of course there is silver lining to each dark cloud! The surprise is that the silver lining is coming not from private sector but Government sector. ISRO, Metro projects implementation, Solar Energy project implementations, highways all over India are sign of we Indians have started getting hang of the situation. On IT side one of the success stories of product selling is Tally ERP. Yes it has sold hundreds of thousands of copies and is unquestionably India’s “Numero Uno” product on IT side! If Tally is doable why can’t others do it? India is the largest democracy and is the only country in the world where all elections use EVM’s- electronic voting machines! Paper ballots are Passe’ in India! The EVM’s were developed by C-DAC! Aadhar card is one such initiative that has become pride of the nation! All these projects indicate that we are slowly coming out of the Chalta Hai mentality! Chalta Hai is a phrase indicating Small achievement is good enough! We should have Sachin Tendulkar’s in each field then only we as a nation can start achieving things!

So friends we started with discussion about Indian mentality of being happy with whatever little is achieved! Will our giants survive the onslaught of market changes? They have the money but do they have the wherewithal other than money? Do they have the mind set? Do they have the technological willpower to go up the value chain? Going up value chain is real hard and smart work. I hope these giants do it, but we are still discussing US H1B visa rules, which is the backbone of current business model of sending people on site to provide services! I hope our current young generation and future generation are as audacious as Elon Musk!

 

I am getting a Toyota Prius!

One of the most important aspect of human civilization is that nobody can stop the technological advancements. Technology, the right one, is simply unstoppable. Humans do not change and they most of the time feel that so and so technology cannot become popular. There are very few visionaries who can guess, predict what can happen after a couple of decades. Initially when any technology comes the cost of its implementation as well as usage is always very high. This cost does come down with increased volume.

Let us consider the scenario in solar energy globally. Germany recently on a particular day produced, 85% of its total electricity produced, by Solar. The energy market in Germany runs like a trade market and the rate at which power is bought by distribution companies is based on demand and supply. On that particular day the rate went below zero! California on one day recently produced 67% of its electricity by Solar. US being a very large country will take a long time to reach Germany’s level as a country but it will happen in pockets. India & China are galloping fast towards solar energy in a big way.

If we think about steam engines and trains, initially people were just curious and felt that trains cannot compete with carts pulled by animals. Once the fear in people’s mind reduced, time of travel decreased and more and more people started travelling in trains and rest as they say is history. My first travel to USA was in 1981 and I had paid US $ 1076/ for return journey. Even today we pay hardly more than that in Dollar terms, for return ticket to USA. Why this happened? Because of safer, faster, larger airplanes increased the volume.

Cell phone is another classic example of technology that made it a disruptive device! When I first got my cell in late 90’s the cell phone was quite heavy, almost ugly, and it cost Rs.16/ minute to receive and make calls! In twenty years Cell phones have become sleek, they are much more powerful than computers specs ten years ago! Ten years ago GB was a word very rarely used even in computers. On top of that making calls is now free! Technologically in 20 years cell phones have gone places! Who would have thought of these changes? In the initial phase cell phone was the so called rich person’s toy. The beauty is that land line telephones have been there for more than 100 years doing same basic work that cell phones do, talking to each other. But other than becoming sleeker, land line phones did not change much in technology. Hence the landline phone population is on the wane world over.

Next classic battle that I visualize is between IC engine cars and Electric/Hybrid cars. The usual naysayers are saying that the current car companies are so powerful that they will just not allow this to happen. What are the parameters that will come into picture? Current volume of Electric/Hybrid cars is miniscule and their yearly volumes are nothing to write home about. So what is it that is needed for the picture to reverse, if it does! Fuel costs is one important parameter. Petrol/Diesel costs have come down from highs of US$ 150/ per barrel and have stabilized around US $50/. The original cartel led by Arab countries is finding it difficult to keep high rates due to new people coming in, huge American & Canadian reserves which were not known even ten years back, have suddenly become available. Their cost of production of extracting oil is also coming down. The fear of Petroleum products simply getting exhausted from the world has gone. So fuel cost may not be THE thing that will trouble current cars. But on the other hand, the cost of producing electricity is definitely going down fast. As more and more countries including India go strongly after solar energy, this cost will come down further. The countries which have lot sunlight round the year can become major players in producing next “Petroleum” for cars. Along with this wind energy is also playing a major role. One thing is for sure compared to petroleum products “Sunlight & Wind” are definitely never going to get exhausted. What all this will also do is pollution levels caused by burning Petroleum products will also come down. On top of this when more and more Electric/Hybrid cars get into use pollution levels will further go down.

Largest component of Electric/Hybrid cars is battery pack. Tesla is already building a Giga battery factory in Nevada where they will be able produce battery packs for five hundred thousand cars a year, at naturally very low cost. Already, Tesla is talking of producing cars that will be only slightly more expensive than sedans. Another limitation currently is the distance the car can travel with one charge. In cell phones  already fast charging systems have come, so I am sure it will happen in Electric cars too! So maybe when you have coffee break or wash room break, you can recharge your batteries. Once these cars are reasonably priced people may use such cars the way we use scooters in India, to travel smaller distances. For last hundred years there has been not much improvement in battery storage technology, compared to other fields and same is the case with IC engine cars. I am sure in batteries the break through is just round the corner! If automotive technology had improved as much as electronics, a car would have travelled round the globe in one liter of fuel!

If we summarize this battle, cost of production of fuel (electricity) to charge the electric cars is going down, cost of battery packs is going down ( it is like engine price going down), battery pack capacity will slowly start going up like some Tesla cars go beyond 350 km per charge, pollution improvement is a bonus. On the other side Volvo has already declared that they will not produce diesel cars from 2023 because cost of using technology for pollution compliance will go up exponentially. Volkswagen has already claimed that they will not produce IC engine cars beyond 2030. In India Suzuki & Toyota have joined hands to manufacture hybrid cars for Indian market. Suzuki and Toshiba have joined hands in India to build Lithium Ion battery mega plant. In USA GM and Ford also have big plans for electric cars. BMW i3 model electric car was quite visible when I last travelled to USA. Along with that a lot work is being done by Google and Apple in driverless car. I feel that controlling an electric car with computers will be much easier than IC engine cars! Will humanity be able to stop Electric/Hybrid car technology? Only time will tell. But in the end right technology will win!

So my next car is definitely going to be a Toyota Hybrid Prius! There is small issue of money in the bank but I will generously accept it, if someone wants to gift me a Prius! I will put big donor name sticker on the car! Happy (electric) motoring!

Et Tu VW? You Too VW?

CarSketches

Human nature is an extremely complex thing to understand and this has been proven so many times but it always comes up with something most unexpected. Here I am talking of human thought in the business scenario. We have seen companies like Apple, from almost going down to coming up with something brilliant that has taken them to the top of the world, in a matter of a decade. We have seen brilliant thinking like totally new way of doing things in the market place. Look at Amazon. All these changes happen these days, in a very short duration. In both these example we see brilliance shown by minds of individuals.

But there are businesses which are long haul businesses like Steel making, Car making, Aero planes. These are businesses where companies have been around for decades, coming up with incrementally better and better products. Of course there is natural survival of the fittest process, closing certain organizations. These long haul companies achieve their name and fame over decades. They achieve the glory in such a way that in India when someone wants to buy a Chocolate, she will say go and ask for a Cadbury! When you want to drink a soft drink she will say let’s have a Coke! (Variants thereof) Company names become synonymous with products they make. Such achievements are real long-term. In such a scenario the VW issue that has suddenly cropped last week, at least to me was a big shock. How they got into such a big mess! What made them do what they did?

I remember from childhood days in Mumbai, there was a restaurant famous for its thick Lassi. (It’s a sweet thick shake like drink made out of yogurt, where thickness is achieved by adding thick milk cream topping) One fine day there was story in newspapers that these guys were adding thick ink blotting paper in place of the milk cream. This made Lassi look original & thick but it was cheating. Luckily the paper was not harmful to health. WHY was this done? Motive was to make a few Rupees more on each Lassi served! What was the harm? Honestly I don’t know but hopefully nothing serious!!

These days I hear of snack vendors adding thinly cut Cabbage in place of Onion in the snack, as the Onion prices have hit the roof. These are usually added to stuff like Batata wada (Potato Patti with some mixes of vegetables) or in Bhel, an Indian fast food, which is made by adding assortment of stuff! WHY this is done? Motive was to retain profits to reasonable level by replacing Onion by Cabbage. What was the harm, there was no real harm!

There was a case of a Theatre owner who rented out some areas in his theatre for people to use as a warehouse. These areas came in the way of emergency exits, which are used well, only in emergencies. The emergency did arise, as there was a fire during one show. The emergency exits could not be opened due to the stuff stored; end result 50 to 70 people died in the fire. WHY was this done? Motive was to make additional money by selling non-existent place for a warehouse and of course make money! What was the harm; a great harm there were deaths!

But the Lassiwala was a small restaurant, Snack vendors are small time businessmen, theatre guy was a big businessman and they all cheated for money! But what about these giants like GM &VW??

A few years back GM in India fudged their records for their SUV while offering vehicles to Government agencies for emission testing. What could have been their motive? Why did they do it? It was definitely not for money but what could be the motive to cheat? This act was restricted to only India operations and did not cover many vehicles. End result many senior people were thrown out possibly with one suicide! Harm, of course there was harm as additional NO was pumped out in the atmosphere.

But what about VW? 11 million vehicles are affected world over as already accepted by VW. What’s going on? Who ordered this cheating? What was achieved? Could this have happened without clearance from Senior Management Group? It’s embarrassing to compare Laasiwala, Wadawalla with VW!! Small timers, all cheated for money and the Giants cheated for God Knows What!! But from what has come out till date VW & GM are the worst culprits. When GM issue occurred GM was the world’s largest vehicle manufacture of cars and so is VW when the cheating issue broke out. Do such companies become so large by cheating? I don’t think so! They do it by sheer hard work, perseverance, and passion. They are here for long haul stay in the market. Their products have been known for both quality and performance. So why they did what they did? What was the motive? Were they never worried that this cheating is bound to come out at some stage? What effect will this have on their name in the global market? Did they think that public memory is very short and companies will easily override the ripple effect? Can one of the waves become a tsunami?  Is VW prepared for a Tsunami? I don’t think so.

How will VW matter close? It’s anybody’s guess as on today. There will be action from Governments leading to large fines, there will be costs of replacements of components on the car or there will be hit on the performance. There will be class action suits in America and these can be really expensive! VW says they have already set aside US $ 7/ billion to handle the matter. As I understand this amount can only handle public relation costs; what about cost of VW’s tarnished name?

I started the blog with discussion on human mind. What sort of mind created this problem? In this world there are people like Bill Gates who have given Billions of Dollars for charity and are encouraging others to do the same. How does this successful mind think differently from VW mind-set? How is the human DNA created? If it is created by circumstances what better example can there be than German nation. What event changed this superb mind-set in Germany to cheat so blatantly! It is a classic case for psychologists. I as an engineer cannot fathom the reasons for such change in the mind. I could have also accepted some cheating, though not justified it, if it were done for a small duration because the launch of that specific product got delayed! Then cheat and launch so-called good product and then switch over to really good products after a small delay, good products has been VW specialty anyway.

Germans are proud about their quality products and German mind focuses on work, work and work in the good sense. Results are seen in Germany’s phoenix like rise post World War II. How current events will affect German psyche? How will German mind overcome this blatant cheating? I am sure they will do it by more work and more focus!

For those who want to read about this issue here is the link.

http://www.greencarreports.com/news/1100125_vw-diesel-emissions-recall-what-you-need-to-know-in-10-questions/page-2