Archive for October, 1998

Devils and deep blue banks

Wednesday, October 21st, 1998

Oct 21, 1998

It’s a circus in there: the efficient world of the multinational bank.

When I passed out of business school in the late 1980s, jobs in multinational banks were the biggest MBA turn-ons (Currently, it’s jobs in multinational management consultancy firms). The reason was simple: fat pay cheques, often with plush accommodation as an add-on. Multinational banks came in two styles: American and non-American. If you got into an American bank, you worked (or pretended to work) your butt off, were on the cutting edge of new developments in the Indian banking sector, and generally behaved like a stud. If you got into a non-American bank, you played golf, ate with the right forks and spoons, and generally behaved like a stud who listened to Western classical music.

Times have since changed. One hallowed non-American bank is having all its senior managers interview for the jobs that they currently hold. If they interview satisfactorily, they get to keep their jobs. Otherwise they get demoted or sacked. To many genteel long-time employees of the bank, this is unnecessary, barbaric and flies in the face of all that they have believed for decades.

One of my MBA classmates joined this bank some years ago from an American bank. Bursting with ideas, bristling with energy, he saw himself as a “change agent” whose duty it was to turn this laid-back white Ambassador of a bank into a crimson Ferrari. A few weeks later, his boss called him in and explained the facts of life. “I’ve missed my annual targets consistently for as long as I can remember by at least 20 per cent,” said the boss. “But I’ve got every promotion and pay hike I could have hoped for. So what’s your bloody problem, Deshpande?” Thus enlightened, Deshpande joined the Alliance Francaise for French lessons at 4:30 p.m., started learning the piano, and with three non-banker friends, even set up a rock band that played several gigs in Pepsi-sponsored college festivals. But several years in an American bank had ruined his value systems; still unable to cope with his increased leisure time, he has returned to the hurly-burly of US-bank car finance schemes.

Compare this to life in an American bank. My classmates who joined one of the biggest ones went through the usual month-long training programme. On the last day, the India chief addressed them and answered questions. The last question asked by a timorous trainee was why she didn’t see a single person in the bank who was more than 35 years old; what happened to post 35-ers? “The rumour is: we shoot them,” said the India chief, with not a glimmer of humour on his face. Within days, the weak-hearted and insecure were staying back in office till nine and 10 at night even if they had no work. Within months, they had got used to the fact that when they came in in the morning, the next table could be unoccupied and cleaned out. No one ever heard of those disappeared colleagues again. There were vague rumours that surfaced sometimes about X or Y (remember him, he was in the mortgages department on the seventh floor?) seen on a Patna street, wandering around with a straggly beard, unable to reply to simple queries.

In the American banks, many meetings went thus. vice-president, assistant vice-president and manager meet in office on a Sunday afternoon to plan tactics for their house loan product. VP: “Harry, Pune is the sunrise market. We gotta do something there. Get in now, cream the market, drop prices when the competition moves in, slash and burn.” AVP: “Sure, Bags. I think we can move JK there tomorrow. He can work out of a hotel room on weekdays, and spend his weekends in the Bombay office doing up the paperwork. Any problems, JK?” Manager (JK): “Uh…my wife is in her eighth month of pregnancy and has broken her leg, and uh…my parents are landing up tomorrow, my father has Parkinson’s disease…” VP: “Great, great, excellent. Harry, why wait till tomorrow? I think JK should take today’s evening train.” AVP: “Yeah, right. JK, get going.” VP: “And I think we should set him a stiff target to meet.” AVP: “Absolutely, Bags.”

This, as opposed to meetings that a friend, then a manager in a British bank, had with his boss and superboss some years ago. Friend: “Sir, I want to be in the personnel department, instead of corporate banking where I’ve been now for three years. Personnel and human resource development is what really interests me and I think I can make a difference there.” Superboss: “I say, Ramamurthy, this is a very unusual request this young man is making. Give me a note with your views on this. With a copy to the personnel department.” Three months and many notes later, they meet again. Superboss: “Young man, we have given some thought to your request, and though this has never happened before, it has always been my style to debureaucratise and innovate and put our bank on a faster growth path. Ramamurthy?” Ramamurthy: “Absolutely, sir. The new lunch menu that you devised, Chopra was telling me the other day, has gone down very well with the staff.” Fifteen minutes of lunch menu discussion later, superboss turns to my friend: “So we have decided that a copy of every memo that goes to or comes out of the personnel department will be marked to you for the next three years. If at the end of that period, you still wish to change from corporate banking to personnel, your request will be considered seriously and appropriate action will be taken. I think that’s fair. Ramamurthy?” “Absolutely, sir.”

But then, maybe all this was logical, after all. If they were paying you so much, there had to be a trade-off somewhere, I guess.

In the name of the holy cow

Wednesday, October 7th, 1998

Oct 7, 1998

No excuses, but our spirit of enterprise can sometimes get mired in muck.

The other night, Sabeer Bhatia, founder of Hotmail, was on television. Two reasons, he felt, why India lags behind the world in spite of its obvious store of talent, were: the absence of a venture capital framework, and the lack of entrepreneurial spirit. Now, Bhatia’s credentials for speaking on this topic are impeccable. Not only is he an incredibly successful entrepreneur, he is also that rare guy who made his money by inventing something: an Internet-based free e-mail service, the sort of brilliant concept that, when you hear of it, makes you exclaim: “Of course!”

Bhatia’s comment has convinced me the world must be told the story of my friend Venkie (not his real name, because he is now a bigshot in a humongous multinational corporation). Venkie had one of the weirdest entrepreneurial ideas I have ever heard. It was ridiculous, and it was — we all had to finally agree — brilliant.

Venkie comes from a temple town in Tamil Nadu, where the floating population of pilgrims per day is around one lakh people. All of them visit the temples, anoint their foreheads with holy white powder and go home happy. These holy white particles are actually crushed and powdered cowdung with a bit of fragrance punched in. It is supplied by the unorganised sector with urchins paid to scrape dried cowdung off the streets.

This was Venkie’s plan: buy a dozen cows, feed them well, collect their dung, have it dried and crushed, add fragrance, and sell the powder in branded sachets! This was clearly madness, or a huge joke, so we didn’t take him seriously.

But we soon found Venkie’s shelves filling up with thick books crammed with large colour pictures of udders of cows from across the world. Conversations on any topic mysteriously ended up at cows and bulls and dung. Soon he had written up a project report in tight management jargon with extensive and complicated calculations. For every six cows or so, he would buy a bull, who, in addition to producing dung, will mate with the cows to produce more dung-producing creatures. Thus no capital expenditure was necessary other than the initial set-up costs, and the periodic expansion of the cowsheds! Plant and machinery would grow automatically to meet demand. And every new machine would be operational, without fail, from day one. After all, the youngest of calves would have to defecate.

Serious number crunching then turned up this remarkable figure: for every one rupee of hay that a cow or bull consumed, it would produce dung that would be worth Rs 2! And this, with Venkie charging the same as the unorganised sector for his powder, even though he would make it in hygienic conditions, pack it neatly and assure the customer of correct weight and consistent quality. And Venkie was not even, at this point, considering the money to be made from the milk his cows would produce and the butter, the ghee, the cheese and various other stuff that could be made from the milk. That was a separate business, which Venkie would get into seriously once the powder sachets took off.

To do all this, Venkie would employ the urchins who were till now running around the streets scraping dung. In a corner of the cowshed would be a school where the children would be taught and given lunch, in between their industrial activity.

By this time, we were alternately in splits and mesmerised by the sheer absurd logic of Venkie’s dream. There was no way this business idea could fail. In fact, we could easily visualise the day when Venkie would be the most important person in that town’s economy, which revolved totally around its temples, and hence around holy white powder and flowers. Soon, his power and influence would extend beyond that town to the whole district. It was inevitable he would become politically powerful; it was just a matter of time before he was elected to Parliament. At which point, we could get all sorts of favours out of him, and be happy beneficiaries of various misuses of power.

It didn’t work out that way. Venkie’s project needed five lakh rupees to get off the ground. He had savings of around a lakh. Armed with his project report, filled with graphs and charts of demand projections and cash flows, he contacted some bankers and was laughed out of their rooms. So he asked his father for a loan. Venkie’s father had been watching all this with incredulous horror for some time now. But he still didn’t take it seriously; he didn’t expect Venkie to chuck up his job at a consumer product multinational and head for the boondocks to market bullshit. So, he agreed to lend his son the money.

Then one fine day, he discovered that Venkie was packing his luggage, wife and child into his Maruti van, about to drive down to his home town and set up house and cowshed there. He was still slack-jawed in amazement when Venkie wrote back from Tamil Nadu to say he had found the land for building the cowsheds, so could he now send the money?

The fledgling venture collapsed within weeks, even before he could buy the cows: his father refused to shell out a paisa. Venkie, too, panicked, perhaps too easily; plus he didn’t like the weather, and dealing with the class of people he needed to deal with now. And thus died this mad and wonderful dream, which would surely have made huge profits and possibly even contributed to that town’s development.

Yeah, I guess Sabeer Bhatia is correct.