Tuesday, January 19, 2010
Good and luck
Sunday, November 29, 2009
Value creation v/s redistribution
Why do firms exist? There are two broad views. The capitalistic view pushed by the US until recently insists that a firm must create value to its shareholders. The European view, however, is that a firm must create value to its stakeholders, which includes employees, investors, customers, society etc. The difference between the two shows up when value is not “created” but simply “redistributed”. Typically, value creation, implies an improvement in status quo. Where such value is tangible, its creation is by way of making things or processes faster, better or cheaper. But where the said value is intangible, its creation is determined by the perception of customers or consumers.
When a bank implements an IT system that speeds up its processes, it definitely creates value. Employees work better, customers transact faster, and risks of improper or fraudulent transactions are reduced. Or a power plant for that matter so long as it does not disturb the natural ecosystem.
On the other hand, let’s take expressways, which reduce travel time, thus creating value for commuters. But we overlook the loss incurred by fuel pumps because of increased fuel efficiency, auto mechanics because cars are on the road for fewer hours, hotels because people reach their destination much faster and need to stop for the night, roadside eateries, which are not allowed on expressways, and even if there is one, commuters might give it a skip and so on. This is a case of value redistribution – from fuel pumps, hotels, restaurants, to commuters. This is also the case with IT outsourcing. In these cases, the first definition comes up as myopic, focusing solely on the firm and its shareholders with total disregard to other players. And sooner or later, such cases will inevitably lead to agitation and outcry.
Recently, the WSJ reported how Mumbai’s black-and-yellow cabbies resorted to physical protests and violence against fleet operators such as Meru. Meru offers incredible value to a certain class of commuters, by simply not screwing up. People don’t pay more for the air-conditioning, but for such basic manners as courtesy and promptness. Nonetheless, it is a case of value redistribution, and is bound to rankle the sentiments of certain groups. Not that I support the case of taximen. Rather, I am appalled at their stupidity for I don’t know what else it can be. The unique prepaid system in our country doesn’t benefit anyone. Passengers pay nearly 50% more than the normal rate and I am quite certain the cabbies get paid less than the regular fare. It is only the middlemen who make money. But how did we get here? Simply because our cabbies refused to be honest. I can pardon them for lack of polish and manners for it is a matter of upbringing, and even the burgeoning middle class is woefully short on this. But there can be no excuses for dishonesty, and unless they are willing to see this, no amount of agitations and protests will help.
Tuesday, July 14, 2009
Where's the media when you need them?
I am most appalled at the state of the news websites. It is incredibly easy to update a website and post live notes as the news pours in. But none of the websites had any mention of the rains until 10AM. All of them waited until noon and posted "articles". By then, everyone that cared about the rains knew about them. The less said about the Mumbai traffic police website the better. Its not that these websites cant do live coverage - they do it with budgets, bomb blasts etc. I have no idea why they dont do it on occasions such as these.
I wish we had a website that posts minute-by-minute updates on situations such as these. Maybe I could start one.
Monday, July 13, 2009
The Delhi Metro
Friday, July 10, 2009
Solving the Traffic Puzzle
There are two aspects of conveyance: affordability and convenience. Convenience includes things such as frequency, safety, ease of access, ease of travel, punctuality, speed etc. As commuters, we strive to strike a balance between the two. For example, a modern day knowledge worker finds public transport ridiculously affordable but extremely inconvenient. Naturally, he will go for a motorbike that improves the convenience factor yet remains affordable. Someone with a better pay will get a car so the convenience factor is improved further. Freeways and expressways will definitely improve the convenience, while the toll charges will make a slight dent on affordability. It is only right that those who seek convenience and are able to afford it make use of such amenities. And with the toll system, we have a way to directly make users pay. So there is no need to bring up issues such as taxpayers money being used for the privileged few.
For the mass transit model to work in India – and by that I mean, for all the car users to switch over – it has to be convenient and affordable to this segment of commuters. Affordability is granted; it cannot be more expensive than owning a car. But what about convenience? Can we really run air-conditioned buses and trains that cover the length and breadth of our cities? Can we have good approach roads to railway stations and parking space to leave cars there?
Such infrastructure doesn’t come cheap. Consequently, such a transport system will put it out of the common man’s reach. Are we then saying we will have two transit systems targeting different types of commuters? Will that be sustainable? It is tempting to look at the Delhi Metro for answers, but I don’t think the comparison is apt. More on this in my next post…