*michael parekh on IT*

ON THE POLITICS OF INACTION

DEAL OR NO DEAL

The squeaky wheel gets the most grease.  That's the one sure thing to be found in any form Democracy from it's earliest days*. 

It's been interesting to see this principle in action again through the current financial crisis, as our representatives in Washington figure out whether they're for or against the $700 billion "bail-out" plan. 

As the Wall Street Journal observes in a post-mortem of yesterday's events,

"Ultimately, they came up with 140 votes from the Democratic side of the aisle, with 95 opposed. Democratic aides acknowledged that, in many cases, members who voted against the legislation were swayed by voter outcry that the plan would help wealthy people at the expense of regular taxpayers..."

"...Republicans heard concerns from community bankers about the commitment made by Treasury to protect investors in money-market funds against losses. The concern was that the action put local banks, which have limits on deposit protections, at a competitive disadvantage."

Politicians are human too, ultimately looking out for their own interests:

"Many Republicans in tough re-election fights opposed the bill. Of the 11 Republican lawmakers judged by the nonpartisan Cook Political Report to be in "tossup" races, nine voted against the plan."

It's truly amazing how even with all our technology, our political system still responds fastest to the most vocal minorities that manage to "flood" their Congressional representatives with phone calls and mail with their opinion. 

It's not always clear that they represent the majority of the constituents of any elected official, but they certainly get treated as they do, every time.

This New York Times op-ed today put the whole thing particularly well:

"House Republicans led the way and will get most of the blame.

It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.

Now they have once again confused talk radio with reality."

After the dust settles on this whole thing, and the actions of all our politicians is examined in the cold light of day, we're likely to find that there'll be plenty of blame to go around on both sides of the aisle. 

It's been disappointing to say the least, that at a time when we need them most, none of our politicians have been truly been able to put aside partisan bickering, and act as representatives of the "silent majority", regardless of political party.

* image source.

ON SOME CANDOR IN ISRAEL

UNEXPECTED STEPS

Not a lot of cheerful news around the world today, as our politicians and the financial markets play a game of chicken. 

But I did think these comments by the outgoing Prime Minister of Israel, on the eve of Rosh Hashanah and Yom Kippur, were one bright spot in a long time.  The New York Times reports (image source):

"Prime Minister Ehud Olmert said in an interview published on Monday that Israel must withdraw from nearly all of the West Bank as well as East Jerusalem to attain peace with the Palestinians and that any occupied land it held onto would have to be exchanged for the same quantity of Israeli territory.      

He also dismissed as “megalomania” any thought that Israel would or should attack Iran on its own to stop it from developing nuclear weapons, saying the international community and not Israel alone was charged with handling the issue."

These are very unusual comments for any Israeli politician, especially one from the right.  As Prime Minister Olmert himself observed:

"“What I am saying to you now has not been said by any Israeli leader before me,” Mr. Olmert told the newspaper Yediot Aharonot in the interview on the occasion of the Jewish new year, observed from Monday evening till Wednesday evening. “The time has come to say these things.”

He said that traditional Israeli defense strategists had learned nothing from past experiences and that they seemed stuck in the considerations of the 1948 war of independence.

“With them, it is all about tanks and land and controlling territories and controlled territories and this hilltop and that hilltop,” he said. “All these things are worthless.”

I read the whole piece twice to make sure I wasn't seeing things.  These are remarkable comments, even from a lame duck head of state who's stepping down due to pending corruption charges.

One can only hope that we see similar soul-searching comments from the Palestinian and Arab sides, sooner than later.  Only then will we actually see a way to Shalom and Salaam ("Peace" in Hebrew and Arabic) in the region in our time.

Here's to a hopeful New Year.  Happy Holidays.

ON IBM IN INDIA

BIG SMALLS STEPS

In this well-written article on an IBM salesman in India, Fortune magazine tells a great story of how IBM is forging a part of it's future in large emerging markets.  As the piece explains:

"Gupta is IBM (IBM, Fortune 500)'s top salesperson in the company's fastest-growing industry in the fastest-growing part of the world..."

"Apple (AAPL, Fortune 500) is known for design. Wal-Mart (WMT, Fortune 500) is known for low prices. GE (GE, Fortune 500) is known for churning out impeccably trained managers.

And IBM? More than anything, IBM is known for knowing how to sell. Ever since the 1930s, when Thomas J. Watson Sr.'s handpicked classes of mostly Ivy League grads began each day with the rallying song "Hail to the IBM," the company has been a vaunted sales training ground.

Six of the company's eight CEOs have come up through sales, including the current one, Sam Palmisano. He calls his 40,000-strong sales force "our face to the client."

The article goes on to tell the story of how this star salesman has achieved his success so far:

"He's not just selling products from an IBM catalog; he's sifting through the company's vast research labs and inventing new combinations of goods and services tailored to each customer."

In this case, the story is how he helped IBM get a good piece of the exploding market for wireless telephony in India.  It's a story that's both about the individual and the company, and is as important in understanding the history of this company, as the role of the Selectric typewriter in IBM becoming a global power in "word processing" before word processing as we know it was invented by Microsoft and Apple.

And like all good stories, this one ends with an enticing twist at the end, offering a glimpse into the next thing that could be a step up for both our hero and his company in the emerging market that's India. It's worth a read.

ON GOLD IN THE NEW CRICKET

IMPORT EXPORT

Looks like the big changes in the world of global cricket marketing I talked about in May, are gathering momentum.  Bloomberg News has a lengthy feature piece on how cricket is being rapidly re-made in it's new form, Twenty20, in arguably it's largest market, India.  An excerpt:

"The Indian league's performance this year is shaking up cricket. With Twenty20, India has turned the tables on England, which invented the sport more than four centuries ago and has controlled the game for much of its history in the former British colonies where it's played.

As India, the world's biggest cricket market, flexes its muscles -- IPL's revenue of about $200 million is an all-time high for a single season in the sport..."

"In India, which has a population of almost 1.2 billion, fans are so smitten with the sport that national Twenty20 team captain Mahendra Singh Dhoni has a detail of five female bodyguards to protect him from the legions of teenage girls who besiege him wherever he goes.     "

The organizers are pulling out all stops to market this new form of cricket, including importing cheerleaders from American football teams to pep up the home games.

Much of this is about money, as the story explains:

"The rapid-fire appeal of a Twenty20 match, which always concludes with a winner, threatens the long-term prospects of traditional Test cricket. This game features men in white sweaters and trousers who take lunch and tea breaks in matches that often end in draws.    

Cricket, which is played professionally in Australia, Bangladesh, India, New Zealand, Pakistan, South Africa, Sri Lanka, the U.K., the West Indies and Zimbabwe, remains a niche sport elsewhere. It brought in only about $700 million in revenue from all countries in 2007, according to the sport's ruling bodies, far less than the $6 billion for Major League Baseball.

But Twenty20 -- which started in England in 2003 before migrating to other countries -- may be a game changer.    

``Twenty20 is the product that can take cricket into new markets,'' says Paul Marsh, head of the Australian Cricketers' Association, which represents the country's professional players. ``Baseball and Twenty20 take about the same time, but it's beyond belief to me that someone could find baseball more exciting.''           

Investors and broadcasters can't get enough of Twenty20. In January 2008, the Board of Control for Cricket in India, which runs the IPL, sold its broadcast rights to Sony Corp. and World Sport Group, a Singapore-based marketer, for $1 billion over 10 years. ESPN Inc. and News Corp.'s Star Sports network, which have a joint venture in India, followed in September with a deal worth almost $1 billion to broadcast a new tournament called the Champions League later this year."    

The story goes on to highlight the global list of billionaires who've invested in re-making cricket in India:      

"Billionaires and Bollywood

Modi, a BCCI vice president, auctioned off the league's eight clubs in 2008 to an A-list group of investors. Indian billionaire Mukesh Ambani, chairman of Reliance Industries Ltd.; Bollywood film star Shah Rukh Khan; and News Corp. Chairman Rupert Murdoch's son Lachlan Murdoch were among the investors who spent about $724 million for the franchises.    

``India is clearly the economic powerhouse in world cricket,'' says Manoj Badale, managing partner of Blenheim Chalcot Ltd., a venture capital firm in London that led a consortium including Murdoch that bought the Rajasthan Royals franchise for $67 million in January.    

Twenty20's potential payoff has also enticed Allen Stanford, chairman of Houston-based investment firm Stanford Financial Group Co. Stanford put up a $20 million purse for a private, winner-takes-all match in Antigua."

Looks like it's game, set, and match.

ON NEW YORK FROM THE AIR

AERIAL PLEASURES

Pardon this detour into an area of interest primarily to flying geeks, but this article on pilots using Shea Stadium as a guidepost to La Guardia airport brought back a lot of flying memories around New York City.  Here's the gist of the piece:

"For 44 years, the procession of planes from nearby La Guardia Airport has contributed to an unusual ballpark soundtrack at Shea Stadium, the roar of jet engines a thousand feet above blending with the cracks of bats and the cries from hot dog vendors..."
La Guardia is one of the few airports in the country where pilots use land markers instead of instruments to guide their landings, along with Seattle (a shopping mall) and Washington (a river). Shea Stadium, which from the sky looks like a blue circle with a green center, is a primary runway guidepost.

For one of the more common landing routes, pilots are instructed to follow the Long Island Expressway until they arrive at the eastern side of the stadium, at which point they bank the plane left around the outfield wall and head straight for Runway 31.

Among pilots and air-traffic controllers, it is known as the “expressway visual approach.”

As a weekend pilot around New York many years ago, I can relate to flying around New York's airports, including La Guardia, JFK and Newark, with Teterboro airport as my primary General Aviation airport (image source). 

There's nothing like seeing New York's iconic landmarks from all those vantage points, a few thousand feet up in the air.

Not the least of these icons of course were the twin towers of the World Trade Center, which for general aviation pilots flying under VFR (visual flying rules), was not only a guidepost on the ground, but an altitude marker for the 1100 feet limit in that area.

New York City is so amazing to see in all it's glory from the air.  This piece brought back some great memories.

ON THE "RENAISSANCE GENERATION"

CRYSTAL BALLS

This interview with the author of a new book titled "RenGen:  The rise of the cultural consumer and what it means to your business", caught my eye.  Here's how the author, Patricia Martin describes "RenGen", aka the "Renaissance Generation":

"The RenGen is a psychographic more than a demographic, but when you look at census figures alone you have this large group of boomers who in their youth idealistically wanted to change the world, got frustrated and cashed out. You also have this even larger, rising segment of young people every bit as idealistic as boomers once were.

If you look at a census table, it looks like a book-ended generation with these two groups on either end. As for their characteristics — they are eco-conscious; they take their cues from nature so they are willing to accept products that are flawed but authentic rather than slickly produced and inauthentic. Dove figured this out with the real-women campaign.

They want to make a difference. They want to live many lives. They don’t want to be told, “You can’t be an architect and a poet.” They are sensualists. Because they are both idealistic and cynical at the same time, they have learned to trust what they experience rather than what experts tell them. That is why design and aesthetics are so elevated right now."

Despite that horoscope like opening, the author really caught my eye with this enticing prediction:

"I predict that what we will see out of the younger RenGen is the largest class of entrepreneurs the United States has seen in a long time. Not only are they driven to do original work, but they are going to want to live that out in originally designed careers."

It's a cool, idealistic vision, especially appealing in these turbulent times.  Adding the book to the reading list.

ON BUSINESSES GOING GREEN

SOONER OR LATER?

The technology industry, especially the enterprise-focused hardware companies, have been doing their utmost of late to re-tool their products and services for the perceived holy grail of new, "green" markets.  An example of this is IBM's Green project initiative launched in the middle of last year:

"In May this year the firm launched its $1bn Big Green Project campaign focusing on ways it could reduce energy consumption.

Technologies which IBM touted last month included liquid cooling solutions, virtualization systems and power management, all of which it hopes to integrate into the new facility.

Data centres have been notorious for consuming vast quantities of power, as well as pushing out large chunks of carbon emissions to keep the beasts ticking over."

You may have seen several commercials IBM has been running to convince it's target market, the enterprise CIOs (Chief Information Officers), of the merits in investing in "green hardware, software and services.  This one is a good example:

It's an uphill climb, as other companies in the industry with similar recent initiatives, like Dell, have found.  This piece in the Register yesterday is a case in point:

"Dell has admitted it won't earn much return on the energetic greening of its operations and products, until CIOs get paid to have greener data centres.

Michael Dell, Dell's founder, chairman and CEO, said in a briefing with journalists in London today, that the underlying interest in green matters is growing at a fast pace.

But he added: "CIOs say the energy cost is 'not in my budget'."

That means that Dell, after a breakneck rush to green its product range, is offering products to CIOs who do not yet have an incentive to buy them.

Dell thinks "this is changing. CIOs are being held accountable." Asked if, when CIOs do get an energy budget responsibility, Dell would be there waiting, he said simply: "Yes."

These markets take a long time to turn around to new trends and opportunities.  Here's hoping in this instance that the market catches up with the vendors some point soon.

ON TV 2.0

CHOICE AWARDS

 It's great that Tina Fey won yet another Emmy for the her performance on the show she created, "30 Rock".  But I think the award for the best line at any Emmy acceptance speech also goes to Tina Fey, who said:

""'30 Rock' is available to be viewed on NBC.com, Hulu.com, iTunes, Verizon phones, United Airlines and occasionally on actual television," Fey quipped."

Now that's an internet and tech-savvy performer.

Oh, and if you've never watched 30 Rock, here's a little taste with the inestimable Alec Baldwin:

From Hulu of course.

ON END OF AN ERA

IMHO

One of the dramatic financial news item over the weekend of course was the conversion of the last two investment banks, Goldman Sachs (GS) and Morgan Stanley (MS) into bank holding company structures, with the blessing of the Government.  As BusinessWeek notes:

"The standalone investment bank died quietly Sunday, Sept. 22, 2008, after a brief but dramatic illness. It was 75 years old.

On Sunday night, Goldman Sachs and Morgan Stanley said they would become bank holding companies, submitting to the authority and oversight of federal banking regulators. After the collapse of Bear Stearns, the bankruptcy filing of Lehman Brothers and the agreement by Merrill Lynch to be acquired by Bank of America, Goldman and Morgan were the last remaining investment banks.

Goldman noted that the move would make it the fourth biggest bank holding company in the U.S. Morgan said it was seeking “maximum flexibility and stability to pursue new business opportunities as the financial marketplace undergoes rapid and profound changes.”

The Fed said it had approved the switch, with allowances for a five-day waiting period to clear any anti-trust hurdles; the banks’ broker-dealer units, along with Merrill’s, will also be able to borrow from the New York Fed.

The move is likely to subject the companies to stricter regulation, requiring them to retain more capital and take fewer risks than they could as investment banks.

The announcement was made without much fanfare (as the New York Times said), and may also make regulatory reform somewhat easier for the next president and Congress. Instead of two kinds of regulated entities, they could well face the need to consider just one."

Much of the media coverage today seems to be focused on how Goldman Sachs is humbled by becoming "just" an ordinary commercial bank, knocked off it's lofty perch as the most eminent of global investment banks.

And the consensus seems to be on how Goldman is going to have to "settle" financially and culturally for being a commercial bank.

There's no question that these moves were in response to some historically major financial market factors, and that all financial industry participants to have to struggle mightily just to survive the difficult times ahead.

This thought though, comes to mind.

Maybe it's just the emotions of a former lifer at Goldman Sachs, but I can't help but think that Goldman may be a commercial bank in structure and name, but that it's unique DNA and culture will not only adapt, but thrive in the long-term under it's new structure. 

The thought that comes to mind in fact is that Goldman with this move may have just become the wolf in sheep's clothing (image source).  And of course there'll likely be some sheep that try to be a wolf.

DISCLOSURE:  I'm a long-time shareholder and former employee of GS.

ON THE FUTURE OF TEACHING

FOOD FOR THOUGHT

If you're looking for some Sunday reading that takes you away from the fires we face in the markets and abroad, and give some food for thought on how we're educating our children, take a look at the New York Times Sunday Magazine issue on Teaching, the College Issue.  Here's a taste of what to expect:

"Does teaching make you a bad writer? Could it make you a good president? How would you teach on YouTube? How would you teach in Dubai?

How can you teach with ... style? From Alaska to Alabama to the Persian Gulf, we look at the mysteries of teaching in all its variety.

Words aside, however, the look of this issue is all-student: headline type, photographs and illustrations are all the work of undergraduate and graduate students from across the country, and a few from overseas as well."

There's a lot of good stuff here, and one of my favorites is this piece on the explosion of amazing lectures available online to anyone anywhere in the world with an internet connection.  The viral online success of Physics Professor Walter Lewin, number one for a while on iTunes University, is a good case in point.

Enjoy.