Wednesday, December 27, 2000

The spirit of enterprise

When you get in touch with the spirit, you will be able to take greater risk and turn resources into wealth.
Gautam Chikermane
Nainam chindanti sastrani; nainam dahati pavakah;
na cainam kledayantyapo; na sosayati marutah
No weapon can pierce the soul; no fire can burn it;
no water can moisten it; nor can any wind wither it.
–Bhagawad Gita, Chapter II, Verse 23
If it’s a comfortable retirement or a home in the hills you’re looking for, you could manage it with your monthly pay cheques. Invest money in diversified financial instruments, ranging from the plain-vanilla, risk-free schemes from the post office like public provident fund (it currently yields 11 per cent) to medium-risk instruments like an index fund (a mutual fund that mirrors a stock market index, like the Sensex or the Nifty, which could give you 18 per cent). You could also look at putting some of your money into high-risk sector funds or directly in stocks (25 to 30 per cent).
But if it’s wealth you want to create, the raw material is risk, the process is entrepreneurship. The highest investment and financial risk is taken by entrepreneurs, a breed of people that is virtually impossible to define (Peter Drucker’s 1993 masterpiece Innovation and Entrepreneurship: Practice and Principles is the best treatise on this subject). As a group, they use and optimise the physical, financial and human resources of a society. When they succeed, they become the leading wealth creators of a country. When they fail, they lose their investment–and that’s their risk: the risk of venturing into new, uncharted territory or looking at old businesses in new ways.
Opinion in Outlook Money

Wednesday, December 13, 2000

The race for intangibles

The day accountants calculate intangibles accurately, investors will give them a standing ovation.
Gautam Chikermane
"May I speak to Mr Gautam"
Yes, this is Gautam.
"I read your article No future in accounts. It was the worst article I’ve ever read! It shows our profession in bad light. Besides, there are many things that are untrue, inaccurate and written with vested interests in mind."
Vested interest? He had my attention. I’m used to angry calls from readers, but never has anyone accused Intelligent Investor of harbouring vested interests. Who’s?
THIS READER, an accountant with one of India’s leading firms, went on like this for some time. Meanwhile, I was bombarded with similar sentiments on e-mail and through letters (To read a representative sample of these responses, follow this link). The article was written to illustrate how accountants, who are best placed to work out the value of intangibles in a business (intellectual capital, brands, franchisees, and so on), are the least concerned about valuing it, and warned them that if they continued their innovation-free practice, they would become redundant. For lack of space I had omitted an important point: that Indian minds are among the best in the world and I have full confidence that if intangibles have to be valued, an Indian has a great chance of doing it. Wake up, my accountant-countrymen, put your minds to this global problem, and help the rest of us calculate wealth more efficiently.
Opinion in Outlook Money

Wednesday, November 29, 2000

Time to turn the tables

Corruption affects our affluence adversely. And only we can change that. All we need is the strength to say: "No!"
Gautam Chikermane
I’M NOT absolutely certain, but news reports tell me that one source of easy money for a large section of Indians is under threat. There seems to be more pressure on government servants to live within the salaries they are given, out of taxes paid by the rest of us. It shocks me to see a junior engineer in the Municipal Council of Delhi have crores of rupees stashed away. To them, corruption is not the monster we think it; rather, it’s a conduit for amassing great wealth. Being in a position of power -- the power to delay endlessly or even stall our day-to-day business, from the innocuous birth certificate that gives us our first identity in India, through the innumerable government departments we have to deal with day in and day out, right till we get our death certificate–these rogues in the garb of ‘servants’ abuse that power. Systematically, mercilessly.
Opinion in Outlook Money

Wednesday, November 15, 2000

No future in accounts

Accountants must realise that their 500-year-old system is irrelevant in the new knowledge-based economy.
Gautam Chikermane
THAT WE'RE living in the Information Age is a cliche. We, as consumers, investors, workers, citizens, are all becoming part of a new knowledge-based world. But the one profession that doesn’t seem to understand this, and is, in fact, obscuring assessment of the true wealth created by companies and, therefore, investors, is that of accountants. It’s a profession that’s living in an information autarchy, unaware of, unconcerned about, and untouched by its customers -- investors, governments, and companies. As an industry that has often been accused of concealing rather than revealing the workings of its paymaster, the company, accountants are today standing at a crossroads. Their sole link to the new world: computing prowess that allows them to run the same numbers faster.
Column in Outlook Money

Wednesday, January 12, 2000

New rules for the New Economy

Letter from a father to a daughter born in the Information Age: taking her through the paces of wealth creation even as he finds his own.
Gautam Chikermane

Meera, my dearest,
As the world celebrates the last year of the 1900s, you will turn three. You already know Papa goes to work in the morning, plays with his computer, gets his friends to play on their computers, and comes back in the evening. And that Ma goes to her office in the study, sits in front of her PC, hammers a few keys on that keyboard -- the PC squeaks and groans and hisses -- to reach her e-mail box. There's something she calls a "mouse" that she clicks and depending on what's on the screen, smiles or frowns. You already know all that.
What you probably don't know is that less than 10 years ago, when we started working, when there was no question of you bringing us the joy you have, when web meant the skin between the toes of a duck, the computer was not as ubiquitous as it appears to you. It was a rare commodity, and I for one would be completely lost just looking at it. As a journalist, of course, I had to learn to type, and instead of typing on the typewriter -- yes, they weren't the antiques you will buy when you turn 20 -- I typed on the keyboard. Spreadsheets and databases came later, and then came the browsers, the most important revolution after the invention of the personal computer.
Story in Outlook Money