It’s Raining Pay Hikes at Wells Fargo (WC)

Wells Fargo (NYSE: WFC) has almost doubled in size after its successful acquisition of troubled bank Wachovia (NYSE: WB), so has the compensation of its top executives. Wells Fargo & Company rewarded its top five executives with compensation more than $11 million in 2009, while CEO John Stumpf went home with a package of $21.3 million reports The Wall Street Journal. Mr. Stumpf received $5.6 million in fixed salary and $13.1 million in stock options (ESOP’S), also his pension saw an increment of $2.6 million. His remuneration in 2008 stood at $8.8 million.CFO Howard Atkins remuneration more than doubled in 2009 to $11.6 million from $4.9 million a year ago. Wells Fargo bank has repaid all the $25 billion it received in 2008 from the U.S. Treasury's Troubled Asset Relief Program, or TARP thus liberating itself from few Govt. restrictions.

Failure Of Indian Leadership Model

In the famous Hollywood flick, Gladiator Maximus famously said “Win the Crowd, and you shall be more powerful than the King”. Leaders don’t need official position of authority if people in and around you look up to you for ‘clues in crisis ‘you are a leader. A lot of trees might get cut for the paper work if we try and make a list of qualities an ideal leader must possess, here are few which I believe are of utmost importance. If a human brain looses self control, the same beautiful mind can be its biggest enemy and self destruction is eminent. So a good leader should be able to control his emotions and passions. You might not appreciate me using the word passion, as many entrepreneurs are passionate (almost all), and passion is the oxygen for excellence in entrepreneurship, but what is important is having a control. The emotional attachment towards success should be very less, this is because being a leader on will see failures, and I don’t know a successful man who has not seen them. If a leader is high on self efficacy he can get his team of the slump faster. A leader CEO/Manger can create value on long term basis only if he is passionate about his job but not too emotionally attached to what he has done or he is capable of doing (ego). Let us take case of Satyam Computers it failed because Mr Raju was attached to what he had achieved and feared that all that could be acquired if he showcases the real stuff, thus compelling him to cook the books from inside, let’s not forget he hardly gained personally from it. Emotional attachment stops one from taking decisions for larger good.
Leaders are neither born nor manufactured, they emerge. A good leader should be less individualistic in nature and more of a team-man. As truly said by lord Krishna ‘Hey Arjuna, keep on doing your duty, without expectation of fruits and victory shall be yours’*
Leadership (Management) Style’s across USA, Japan and India…
I used these two countries as its chalk and cheese when it comes to USA and India in terms of how companies are run, that does not mean it’s not all Smoke & Mirrors when it comes to running the Show in USA.
One clear difference I make out is in nature (the mindset), in USA people are very individualistic and the first generation entrepreneurs don’t focus much on legacy, they actually might not mind to hand over to professional Managers to run the show. If we talk about the Indian Large Business houses few names come to my mind are ITC, L&T, Gujrat Ambuja Cement, ACC the Murguppa Group and many more but we can actually count them, but in USA things are different.
I am not saying that Professional Managers create better value for shareholders or not, neither do we have enough empirical evidence, we have seen fiascos like Enron and World Com in the past due to larger than life ambitions of these CEO’s these companies met their destiny.
Talking about styles of managers/leaders major difference between styles of USA and Japan is the relationship between suppliers/vendors and companies are totally different. If we see the case of Auto Industry crippling with lack of fuel of liquidity currently, companies like GM and Ford try to create competition amongst the suppliers to get the best deal.
In Japan likes of Toyota and Honda go for cross holdings in the suppliers companies and make them part of the family and believe in long term relationship, also supporting them to develop new technologies and help them achieve operational efficiencies. And we all know what success companies like Toyota have scripted in world’s largest car market.

*Essence of Bhagvat Gita , but not the exact words.

Job-Loss Due to Outsourcing, Overhyped!

Everyone loves to talk about globalization it’s a favorite topic anywhere you go from coffee shops to business schools. Workers complain about how their jobs are shipped to lower-wage countries.CXO’s are always excited about new overseas markets. Activists & NPO’s of various types are concerned with environmental damage or suffering that it may cause or does cause in third world countries. This raises most important question: Is Globalization the most defining trend of this decade for the West?


If we try 7 see local news & event's tend to occupy more mindspace in our everyday life than a Global. If we go on asking people, most people have a view's on whether their Mayor is doing a good job, is the serial killer caught by the County Police or realty prices in a particular area. Very few people have a view on the United Nations Secretary-General's job performance, or know his name even for that matter.

Call-centers in India are maligned, as the developed-country jobs being shipped overseas. But the number of jobs at stake is small relative to the overall work force. And their importance is also overstated.

We must ask this to ourselves how many parents in the U.S. dream that their kids will grow up to work in a call center? Hardly any!

Sometimes we tend to miss the bigger picture...Americans are worried about their job being sent to China? A cheap worker working in a shady sweatshop in China isn't necessarily their biggest threat. It's more likely that an average American worker will be replaced by better technology or cut by management trying to use one less worker & time.

Examining detailed data on changes in the U.S. the authors Bruce C. Greenwald and Judd Kahn have shown that job losses due to higher productivity greatly outnumber those lost to globalization, meaning here shifting production from Country A to Country B and then shipping the product back. Think of the large number of secretaries and office workers eliminated by the desktop computer..
Globalization and trade have helped countries that have made the tough local decisions to liberalize markets and unleash the powerful incentives of capitalism.
If this sounds counterintuitive, it helps to remember that "globalization" is just today's catchword for a phenomenon we've seen before. Messrs. Greenwald and Kahn compare our age of expanding global trade to the early 20th century and find a similar picture. Trade as a share of global output rose until 1920 due to advances in shipping, which helped build global markets for commodities like grains and coal.
This expansion of trade proved only partial and cyclical, however. Commodities became cheaper and thus a smaller part of spending. Households began spending more on manufactured goods, such as washing machines and automobiles that at the time were harder to globalize because they depended on local sales networks and tastes. That caused global trade's importance to shrink.
This time it will be services, which are harder to transport across borders. The desire for services will drive demand for managers, teachers, builders and nurses. These are exactly the high-skilled professions that are hardest to replace with technology or offshore workers.

PS: This article is inspired by a blog on Outsourcing by Mr Carew who covers M&A for the Wall Street Journal Hongkong, i have tried to add some Indian Flavor to it

Indian Textile Indst. to Benifit from Neighbors

Textiles and apparel account for around 13% of India’s exports. As per Assocham, an industry association, the sector employs about 35m people. According to a recent study by India Today, a weekly news magazine, 700,000 jobs have been shed in the sector, both by organized and unorganized players. But that’s not all we might be in for good times ahead, as we might profit from woes of Pakistan and China, as the later is seeing pressures on cost due to appreciation of RMB (Chinese Yuan) and wage increases in China, cost gaps with countries like India, Pakistan & Bangladesh have narrowed. India can be one of the largest beneficiaries.

Indian companies are gaining from lower volumes or stagnating volumes from Pakistan. Given the increased concerns on terrorism in Pakistan, almost no company wants to increase their volumes from Pakistan. Big ticket retailers mentioned of contingency plans to move orders out to other countries, including India, if the internal situation in Pakistan worsens.

India will also see incremental benefit if growth in China slows, cost pressures in China increase and Pakistan remains embroiled in social strife and tension. India is set to gain from the Rupee depreciation, but the fruits won’t come to the surface as many Indian companies have hedged their exposure when rupee was higher and the next couple of quarter’s forex losses are likely to be high. The relief from lower rupee will be visible primarily in FY10.
Having cited all the above mentioned factors there is a flip side, and certain roadblocks to India stamping its authority on global textile market. Cotton prices and raw material prices are up 30%-50%. At Rs47-48/ US$, we can absorb the cost increases. But we are hedged for the next two quarters and so will realize the benefits only after that.
Due to the current financial Tsunami whose effect is now seen on the main street, US retailers are reducing inventories and as a result we expect that Indian companies will see increase in inventories and also further pressure to reduce cycle times. The sourcing companies maintain that given the sharp slowdown in consumer sentiments in USA and Europe, the focus on costs is increasing by the day. All in all opportunities always come with some sort of risk’s , they have to be taken to seize the moment.


*The Source of data and information for the above article was from a report by CLSA.

Who Owns Mumbai ?

Land of million opportunities, where million dreams are buried and born every day, home to Bollywood testimonial to thousands of scripted success stories, witness to many, ‘Big Indian Dreams ‘ coming true…,Maximum City, City that never sleeps…it can be associated with many such adjectives.
The city is Jewel of all Metros , Mumbai contributes 10% of factory employment, 33% of income tax collections, 60% of customs duty collections, 20% of central excise tax collections, 40% of India's foreign trade and rupees 40,000 crore (US $9 billion) in corporate taxes.*
But the big question which we have is, who really owns Mumbai? Is it the Men who Rule it, or self proclaimed Political leaders, or‘We The People’, wait a minute who comes under the purview of so called as we the people, is it the ‘Marathi Manus’1 or North Indians . If we dig deep within ourselves the answer is as clear as a crystal ball, Mumbai belongs to men and women who build this great city. And who are they, they are no one but common men and women who had a dream in their eyes and worked hard and chased it, and even if they were light years from fulfillment of destiny, they had a smile on their face.
And this ‘Stupid Common Man’ is tired of ‘Raj-giri’, pardon me for my language and use of famous phrases from recent bollywood flicks. Common man is crushed between some myopic and petty political actions, and pressure of earning daily bread. These actions actually may not give great deal of political mileage to a nascent Political Party, only it would play in hands of the ruling party. Let me not get my hands dirty by writing about our Politicians.
Talking about Marathi Manus, is against North Indians , I do think so, any stupid common man in Mumbai is too busy to care about stuff like that , here everybody has to think about their daily bread and any man Marathi, Gujrati or Bengali, tries to keep away from the mess. I have a serious doubt, if our leaders say that Marathi Manus is not getting his rights and a place that he deserves, I will ask who is Marathi Manus? Is he Milkha Singh that speaks better Marathi than Punjabi and has been a domicile resident of the city for 25 years or Rambharose who prepares better Puranpoli’s2 than a Marathi brahmen cook, or is Sheikh Nadeem who dances in Ganpati procession of Lalbaugcha Raja3. Even I was at the receiving end of things a very good friend of mine from Jaipur commented on a discussion on a b-school in Nagpur “ Sir your home is getting all the big ticket intellectual Investment”, I replied “Sir my home is the same as yours and we call it India”. This may sound to dramatic but this was the only reply I could think at the point of time.
I am Gurathi, and speak fluent Marathi and proud of the same, and I don’t believe that since one man went against the non Maharashtian’s the entire Marathi community should not be blamed. ‘An Eye for Eye leave all the residents of Mumbai Blind!.... As I always say.Revenge is sweet , but unfortunately not Fruitful!
* Mc Kinsey Report Published in 2005 in association with NASSCOM. http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/NASSCOM_McKinsey_Report_2005.pdf

1 The Common Maharashtrian Man.
2 A Sweet delicacy from Maharashtra.
3 Lalbaugcha Raja is the oldest (75 years) Ganesh Mandal in Mumbai, They say all your wishes are fulfilled by lord Ganesha. This Idol has a first right of visarjan . Muslims in Crafford Market area, during the last day do a complete Pooja and then lead the procession before the Idol is immersed in Girgaum Chowpati in Mumbai.

Innovation Liberates

Fiction liberates and Reality educates, and if we don't learn we don't evolve.. Innovation and adaptation and most importantly acceptance are the key to chest of Doom, in which we find ourselves locked. Jobs being slashed right , left and center uncertainty and hope lingering heavily in the Air, what should we do....Or What can we do...Are we responsible for Sins of few aspirational (for lack of a sophisticated word)Investment bankers...We ask ourselves why should we suffer?
But if we check the History one fact is accentuated... the entire community pays for actions of one Aspirational (Greedy/Maniac)Leader. We can cite millions of examples from Jangeis Khan to Adolf Hitler, to Osama- Bin laden and few bankers.I believe herd mentality to earn profits of few basis points and follow the leader spelt the dooms day.
Yes you may argue i don follow the herd.. i am different..I think differently.. But there lies the catch we as a human race are excellent thinkers and less of doers.. as it takes courage to swim against the tide.
But History has been testimonial to the fact that great leaders and Change agents who have the tenacity to seize the moment emerge as strong leaders.
And in the Indian context i appreciate the proactive measures taken by Dr Subarao to tackle the situation,some thing that was never done and was never thought of, reminded me of situation when Manmohan Singh was the Finance Minister, and when he took decision to pledge Gold Reserves and Open the Economy. True these decisions are not taken by a single man, but men having vision can influence Bold decisions. Yes Call Money Rates were as high as 20%.. but taking action in all three fronts was a bold and appreciated move. Hard decisions seldom don't come with a pinch of a salt...
But these decision are key ingredients to as i said seizing the moment.
If India is able to weather his storm ( and this Sub-prime Crisis is one Perfect Storm seen once in Century)it is poised for emerging as a strong leader.

Love Your Work!

Real motivation comes from within, real drive comes from within we always try to derive inspiration from others, we read success stories, all of us love a story of an outright underdog who pushes himself to glory.
The key for success actually lies within you, and it’s the journey and not the destination that is more important. “We all are looser in some way or the other”, is what one friend of mine use to say always, he was of the belief the coolest guy in the college is a looser at something or the other and that’s what pushes him to be cool. A nerd pushes himself towards books because he believes , books are the only thing that will make him successful, so is it fear what helps us to push ourselves, fear , fear of failure , fear of not being popular, fear plays a crucial role in motivating us.
Wait a minute is it right, should fear motivate me? Or passion motivates me?
I leave this question to you, but if one thing for sure if fear does motivate you, you don’t enjoy things, you don’t enjoy the journey called life, whatever you are is just because of that two letter word ‘what if?’
Man is a social animal, and trusts me you hate it or love it, deny it or accept it we have herd mentality, if someone says something is good and you just accept it “ hey is that good, good for me?” this is a question we seldom ask. To cite an example I don’t have to go too far away in my b-school every Tom Dick, Harry and Sally wants to be either an Investment Banker or wants to be an Equity Analyst. Without even knowing what it is all about?
It’s Innovation that liberates and not imitation, I came across another sect of people, who sincerely believe success is a function of GPA, and there is this elite class of people who walks with their head held high and are immortals in the campus. If we have to run a regression equation its simple one depended variable is their academics, on which their life depends. And these immortals also include list of people who have worked over the years in corporate, but I don’t blame them since they have been groomed in the similar environment. Then there is a breed of people like me who totally believe that formal education and set patterns can upset you, as you are caught up in Shackles’ which you can never really break, and stops you indulging in innovation. By saying that I am not advocating my beliefs and saying there should be no diligence and there should exist complete chaos. No method to the madness is must, but let’s has madness at the first place; I always say that there is a pleasure in being mad, pleasure which few big mad men know. And Madness stems from passion, passion to learn perform and innovate.
Coming back to drive and motivation I believe that one should do whatever he or she loves to do,” it’s easy to say that, stakes are high, I got liabilities up my sleeves and for me money is the key”, I totally agree but I propose a hypothesis that , hey if you are not good at something and if you don’t do something with passion you will never outperform in that field, in that job, rather you join a field which you love and are passionate about, your success probability increases. Myopia is a shortcut to disaster.

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