At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit
There's more to it than a good-looking bottomline. For one, there's people -- you and I.
Gautam Chikermane
The bottomline: this is one of the most disturbing books I've ever read. One that is making me question my beliefs, convictions, and expectations out of my money, in a way that no other has. It is harsh in its straightforwardness, unpretentious in its balancing of values that run counter to one another. The hypothesis -- that beyond a point, capitalism, competitiveness and the free market need to be controlled -- is convincing: reduntant workers committing suicide on being laid off, dangerous radioactive chemicals running amuck in clear streams, bribes, illegal price fixation, ugly defence deals. The treatment is ruthless. And it reads like a thriller.
The book is not so much about Jack Welch and the company he heads -- General Electric, the world's most valuable company (its market capitalisation on November 23: $309.2 billion, or Rs 12,97,800 crore, against India's GDP of Rs 11,49,000 crore) -- or the management trends of the US economy, or even the ghastly acts that respected companies commit in trying to reach their ends, as it is about you and I, and our place in the new capitalism. An otherwise fine -- possibly the best proven -- system that has reached its nadir. A point where the bottomline is everything.
Book review in Outlook Money
Saturday, April 28, 2001
Friday, April 27, 2001
A Future Perfect
Neither worship it nor throw stones at it -- just learn to live with globalisation.
Gautam Chikermane
Hindustan Lever is an ‘Indian’ company, with brands that are part of many Indians’ lives -- Dalda, Lux, Lifebuoy. But 74 per cent of it is owned by UK-based Unilever. Infosys Technologies is an ‘Indian’ company, almost all of whose turnover -- and profits -- comes from services delivered outside India. Americans can buy its shares on the Nasdaq as easily as you can on the National Stock Exchange. ‘Foreign’ institutional investors own a huge chunk of this company. So, how ‘Indian’ are Lever and Infosys? Globalisation affects your investments like never before.
You worked for a head-hunting firm that had good business from a big software company. Then, the software company got taken over by a US-based leader, which had its own German head-hunting advisor. Your company closed down. You joined a Finnish cellphone company at four times your last salary, stock options (at the Nasdaq) aside. Globalisation affects your very source of livelihood.
Opinion in Outlook Money
Gautam Chikermane
Hindustan Lever is an ‘Indian’ company, with brands that are part of many Indians’ lives -- Dalda, Lux, Lifebuoy. But 74 per cent of it is owned by UK-based Unilever. Infosys Technologies is an ‘Indian’ company, almost all of whose turnover -- and profits -- comes from services delivered outside India. Americans can buy its shares on the Nasdaq as easily as you can on the National Stock Exchange. ‘Foreign’ institutional investors own a huge chunk of this company. So, how ‘Indian’ are Lever and Infosys? Globalisation affects your investments like never before.
You worked for a head-hunting firm that had good business from a big software company. Then, the software company got taken over by a US-based leader, which had its own German head-hunting advisor. Your company closed down. You joined a Finnish cellphone company at four times your last salary, stock options (at the Nasdaq) aside. Globalisation affects your very source of livelihood.
Opinion in Outlook Money
Sunday, April 15, 2001
A deadly mistress called greed
When you invest in a stock you think will quickly give you 30% be ready to lose as much as quick.
Gautam Chikermane
WHAT ON earth could make a man kill his children? When the answer is ‘money’, a crime that could have been tragic seems only appalling. Forty-year-old Sanjay Agarwal and his wife Sapna (33) decide to do away with their lives–and take those of their two innocent children, Ashita (10) and Chirag (6), as well. They killed themselves and their children by hanging from a fan in their house in Delhi on March 21. Reason: Sanjay, who worked with Omkar Securities, suffered heavy losses in the recent stock market crash, the second in 12 months, lost his money, his clients. And his life.
Five days earlier, on March 16, Virender Kumar Aggarwal (48) of Hissar (Haryana), and his wife Ramkali committed suicide at a hotel in Delhi’s Paharganj. In his suicide note, Virender, a head cashier at Punjab National Bank, admitted to pilfering Rs 70 lakh from the Bank Employees’ Cooperative Society. He was a known stock market gambler, but no one believed he would gamble the society’s savings away. He did. Why?
Opinion in Outlook Money
Gautam Chikermane
WHAT ON earth could make a man kill his children? When the answer is ‘money’, a crime that could have been tragic seems only appalling. Forty-year-old Sanjay Agarwal and his wife Sapna (33) decide to do away with their lives–and take those of their two innocent children, Ashita (10) and Chirag (6), as well. They killed themselves and their children by hanging from a fan in their house in Delhi on March 21. Reason: Sanjay, who worked with Omkar Securities, suffered heavy losses in the recent stock market crash, the second in 12 months, lost his money, his clients. And his life.
Five days earlier, on March 16, Virender Kumar Aggarwal (48) of Hissar (Haryana), and his wife Ramkali committed suicide at a hotel in Delhi’s Paharganj. In his suicide note, Virender, a head cashier at Punjab National Bank, admitted to pilfering Rs 70 lakh from the Bank Employees’ Cooperative Society. He was a known stock market gambler, but no one believed he would gamble the society’s savings away. He did. Why?
Opinion in Outlook Money
Saturday, March 31, 2001
Uncertain rewards
It's always better to invest in a basket of stocks than in the one great stock. Any fall will never be as hard.
Gautam Chikermane
THERE IS a principle of physics discovered by Werner Heisenberg (1901-1976), best known as the founder of quantum mechanics, that demonstrated that certain pairs of variables cannot be measured together. Specifically, in a 1927 paper, just five years before he received a Nobel Prize for physics in 1932, Heisenberg concluded that the more precisely one determines a sub-atomic particle’s (electron, for instance) position, the less precisely can one determine its momentum. A forecast of the particle’s trajectory is, therefore, subject to an unavoidable inaccuracy. This is called Heisenberg’s Uncertainty Principle.
This ‘unavoidable inaccuracy’ reflects itself on the stock markets, too. There is no certainty that just because a company has been performing consistently well, it will continue to do so. There is no certainty that an undervalued stock will not remain undervalued forever. There is no certainty that a mutual fund that has generated decent returns in the past will continue to do so in the future–that’s the reason why securities regulators the world over have funds publish this statement in their prospectuses: "All mutual funds and securities investments are subject to market risks and there is no assurance and no guarantee that the fund’s objectives will be achieved."
Opinion in Outlook Money
Gautam Chikermane
THERE IS a principle of physics discovered by Werner Heisenberg (1901-1976), best known as the founder of quantum mechanics, that demonstrated that certain pairs of variables cannot be measured together. Specifically, in a 1927 paper, just five years before he received a Nobel Prize for physics in 1932, Heisenberg concluded that the more precisely one determines a sub-atomic particle’s (electron, for instance) position, the less precisely can one determine its momentum. A forecast of the particle’s trajectory is, therefore, subject to an unavoidable inaccuracy. This is called Heisenberg’s Uncertainty Principle.
This ‘unavoidable inaccuracy’ reflects itself on the stock markets, too. There is no certainty that just because a company has been performing consistently well, it will continue to do so. There is no certainty that an undervalued stock will not remain undervalued forever. There is no certainty that a mutual fund that has generated decent returns in the past will continue to do so in the future–that’s the reason why securities regulators the world over have funds publish this statement in their prospectuses: "All mutual funds and securities investments are subject to market risks and there is no assurance and no guarantee that the fund’s objectives will be achieved."
Opinion in Outlook Money
Thursday, March 15, 2001
Invest in the instrument called you
There is one law you must obey so that You can continue to generate wealth: You must grow.
Gautam Chikermane
...a world in which people work with their brains instead of their hands.
Wired magazine’s definition of ‘New Economy’
Wealth creation has had a direct link with investments: the more you invest and the longer you allow those investments to compound, the more you accumulate. Saving (the money you don’t spend now in the hope that it’ll grow so you can spend more of it tomorrow), therefore, is a major part of this exercise, the others being the risk, the returns, and the duration of the investments. So, we invested in financial instruments ranging from government securities to company bonds and fixed deposits to stocks. The experts told us it was wise to diversify, so we spread our investments in instruments that gave varying returns, which took care of our short- to long-term needs. To this diversified basket of securities, I propose to add one more instrument: You.
Opinion in Outlook Money
Gautam Chikermane
...a world in which people work with their brains instead of their hands.
Wired magazine’s definition of ‘New Economy’
Wealth creation has had a direct link with investments: the more you invest and the longer you allow those investments to compound, the more you accumulate. Saving (the money you don’t spend now in the hope that it’ll grow so you can spend more of it tomorrow), therefore, is a major part of this exercise, the others being the risk, the returns, and the duration of the investments. So, we invested in financial instruments ranging from government securities to company bonds and fixed deposits to stocks. The experts told us it was wise to diversify, so we spread our investments in instruments that gave varying returns, which took care of our short- to long-term needs. To this diversified basket of securities, I propose to add one more instrument: You.
Opinion in Outlook Money
Wednesday, February 28, 2001
For your child's sake?
There is only one way to put a great fortune to use: giving while you are alive to causes you think are important.
Gautam Chikermane
Poot kapoot to kyon dhan sanchay/ Poot sapoot to kyon dhan sanchay Why bequeath wealth to an unworthy son/ Why bequeath wealth to a worthy son
-–Sant Kabirdas (1398-1448)
One of the flimsiest and commonest excuses for not parting with the wealth one accumulates in one’s lifetime is that the wealth is being created for one’s children–their education, their security, their financial freedom. One has chosen to be an entrepreneur, struggled and created wealth against all odds so that one’s children can go ahead and become poets, if they should be so inclined. There should be nothing they want and not be able to get simply for lack of money. After all, society didn’t help me when I was in need; so, what moral grounds does the same community, government, nation have to expect this philanthropy from me, these people ask.
Ironically, the answer is: for the very same children on whose tiny shoulders they put the gun and shoot off this excuse. In June 1889, millionaire businessman Andrew Carnegie–whose millions could finance the US economy for much more than a month, unlike Bill Gates’ billions, which may be able to finance it for two days–wrote a beautiful article that extolled the rational virtues of charity and broke all the myths associated with the subject. His aim was to explore the options one had in respect of what to do with one’s wealth after one passes on. According to him, there were three modes in which surplus wealth can be disposed of: "It can be left to the families of the decedents; or it can be bequeathed for public purposes; or, finally, it can be administered during their lives by its possessors."
Opinion in Outlook Money
Gautam Chikermane
Poot kapoot to kyon dhan sanchay/ Poot sapoot to kyon dhan sanchay Why bequeath wealth to an unworthy son/ Why bequeath wealth to a worthy son
-–Sant Kabirdas (1398-1448)
One of the flimsiest and commonest excuses for not parting with the wealth one accumulates in one’s lifetime is that the wealth is being created for one’s children–their education, their security, their financial freedom. One has chosen to be an entrepreneur, struggled and created wealth against all odds so that one’s children can go ahead and become poets, if they should be so inclined. There should be nothing they want and not be able to get simply for lack of money. After all, society didn’t help me when I was in need; so, what moral grounds does the same community, government, nation have to expect this philanthropy from me, these people ask.
Ironically, the answer is: for the very same children on whose tiny shoulders they put the gun and shoot off this excuse. In June 1889, millionaire businessman Andrew Carnegie–whose millions could finance the US economy for much more than a month, unlike Bill Gates’ billions, which may be able to finance it for two days–wrote a beautiful article that extolled the rational virtues of charity and broke all the myths associated with the subject. His aim was to explore the options one had in respect of what to do with one’s wealth after one passes on. According to him, there were three modes in which surplus wealth can be disposed of: "It can be left to the families of the decedents; or it can be bequeathed for public purposes; or, finally, it can be administered during their lives by its possessors."
Opinion in Outlook Money
Friday, February 16, 2001
Opportunities abound
The wealth creator suddenly has greater access to the one missing factor of production: money.
Gautam Chikermane
As you read these lines, there’s an exciting career being born in this country, a career that could also generate remarkable wealth. If you venture into it, you will get a monthly salary that will range from above average to lavish. This is aside from a heavy pot of gold waiting at the end of the rainbow–if you get to the end, that is. I’m talking about entrepreneurship. With the changing nature of the big picture, smaller opportunities are coming at us at warp speed. Yes, the Internet and its slew of accompanying technologies is the one major driver of this career, but even outside of the bits and bytes, our country is changing–for the better. Indians are sitting at the cutting edge of the digital revolution, new prosperity is forcing markets to mature, corruption is down, licences are virtually over, and most important, the face of capital markets is changing.
India has been, is, and hopefully will remain, a nation of entrepreneurs. The one change that the financial markets are driving today is putting resources in the hands of the prime driver. The entrepreneur suddenly has greater access to the one factor of production that has been missing in her quest to create wealth: money. For four decades after freedom, India Inc remained chained and enterprise was sacrificed at the altar of greater good, or socialism. Hence the licences, the inspectors, the harassment, the corruption, the babus, the politicians–a mixture potent enough to shoo away the most dynamic among men. And yet Indian enterprise survived. But only just. It could not, for instance, ensure economies of scale that have helped China advance so much so fast–go to any shop today and you’ll know what I’m talking about: for virtually every Indian product there is a cheaper and better Chinese product available.
Opinion in Outlook Money
Gautam Chikermane
As you read these lines, there’s an exciting career being born in this country, a career that could also generate remarkable wealth. If you venture into it, you will get a monthly salary that will range from above average to lavish. This is aside from a heavy pot of gold waiting at the end of the rainbow–if you get to the end, that is. I’m talking about entrepreneurship. With the changing nature of the big picture, smaller opportunities are coming at us at warp speed. Yes, the Internet and its slew of accompanying technologies is the one major driver of this career, but even outside of the bits and bytes, our country is changing–for the better. Indians are sitting at the cutting edge of the digital revolution, new prosperity is forcing markets to mature, corruption is down, licences are virtually over, and most important, the face of capital markets is changing.
India has been, is, and hopefully will remain, a nation of entrepreneurs. The one change that the financial markets are driving today is putting resources in the hands of the prime driver. The entrepreneur suddenly has greater access to the one factor of production that has been missing in her quest to create wealth: money. For four decades after freedom, India Inc remained chained and enterprise was sacrificed at the altar of greater good, or socialism. Hence the licences, the inspectors, the harassment, the corruption, the babus, the politicians–a mixture potent enough to shoo away the most dynamic among men. And yet Indian enterprise survived. But only just. It could not, for instance, ensure economies of scale that have helped China advance so much so fast–go to any shop today and you’ll know what I’m talking about: for virtually every Indian product there is a cheaper and better Chinese product available.
Opinion in Outlook Money
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