Studio in Leuven

Its over, almost over and I even booked my tickets back to Bangalore on Jul 31st which leaves my Studio open for rent from August 1st. Given the audience of this blog, I thought it might be a good idea to publish a post about the Studio so I can save on spending an extra month’s rent, my contract ends August 31st :)

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  • Small Room (dont exactly know the dimensions).. but adequate for me and I’m 6 feet tall.
  • Free TV, Bed, Couch, Table, Study chair, Utensils and some forks and knives (Practically furnished)
  • Own toilet and shower with hot water ofcourse…
  • Huge Kitchen shared by two (My house mate who is in the first year of college), Kitchen is all yours from Friday afternoon until Monday morning because he is Belgian and goes back home every weekend
  • Oh, I forgot to mention Free Fridge and Vacuum Cleaner
  • Internet is free as well with a free wireless adapter (which I’m not carrying back home), but highly unreliable..
  • Studying at home is not a good idea, although very quite… I never really studied in my Studio
  • Oh, btw, I was the first tenant and first resident in the room, so its fairly clean
  • Rent was 325 Euros this year… but not sure how much it will be next year… I doubt it will be increased because of strict rent controls in Leuven
  • Oh free heater ofcourse.. you dont have to worry abou that
  • Electricity is excluded in rent, it was 270 Euros for the whole 10 months for me
  • Since its on the top floor, free view of the moon and stars as you sleep… I’m not kidding!! If you need complete darkness before sleep, this might not be the place for you except in winters!
  • Finally, and beleive me most importantly, the landlord (Jeff) and his mom who dont live here are really nice people.
  • Pictures are here: I must warn you I’m a very good photographer and the place in the snaps looks much nicer than in reality :)
  • Oh, btw.. free microwave too along with super nice electric stove!!

Studio available on the market from August 1st!

Rationality of Irrationality

Now that it is job hunting season, which it has been for a while for most students, my assumption is that it’s not only hard to find good opportunities in the current economy, but even more difficult to negotiate on good pay terms once opportunities are found. The reason is when the potential employee has a very low BATNA (Best alternative to negotiated agreement), the employer can indeed push terms favorable to him forcefully.

In analyzing this situation, I concluded that it is more beneficial to be irrational rather than rational… For example, let’s say X’s aspiration base is $ 300,000 (Yes, I know that’s an outrageous aspiration aka investment bankers’ aspiration… hehe) and his base expectation is $ 200,000 (I think I should remember what one of the investment banks told students a few months back – that they plan to hire 1 employee from Belgium!).

Any case, X finds and is chosen for an opportunity in company Y and it can afford to pay $ 250,000 and yet Y, given the current situation, only offers $ 150,000. Now let’s say X’s next best opportunity is a job at Z (not as desirable as Y’s offer) and pays only $ 100,000. What should X do?!

The rational choice in this case might appear to be that X must accept Y’s offer of $ 150,000 while knowing fully that he deserves the $ 250,000 that Y can afford to pay. Yet, I believe it might also be rational to accept Z’s offer and reject Y!

X has a very weak BATNA. In this case, it appears to me that one of the rational choices is to be irrational and not accept Y’s offer hoping that Y will not have a better BATNA either and therefore will offer to pay at least $ 200,000 which is X’s base aspiration! Of course, this depends upon what is Y’s BATNA… but the bottom line is when you have nothing to negotiate with, irrationality might be the only affordable tactic :) I guess this is the basis of the Chicken game… but interesting to think which kind of applicants would have enough courage to play that game.

Opportunity cost

Its Friday and Its a silly post :)

Recently, during lunch… I told my colleague that everything in life can be explained by economics :) I could tell she did not agree with it… or at the very least she thought I’d gone crazy… I’ve wondered if I truly meant it or if I was only exaggerating… I’m beginning to realize that I meant it :) Here’s an example of how much in life can be explained by economics.

Death! why do we fear dying? We don’t fear it for what will happen after death because clearly after death, nothing happens or can happen. OK, a religious person would believe he/she will reach heaven which is not a reason to be fearful of. I doubt anybody truly believes they will reach hell because we all have moral justification for everything we do :)

So why then do we fear dying? Economics can explain it… The reason we fear dying is the “opportunity cost” of being dead… the opportunity cost is everything we could have done by being alive instead of being dead :)

In-company projects

We are all in the final phase of MBA: The in-company project. If my guess is right, most of my classmates are struggling with one big challenge right now… “How to convince large corporations to appreciate the novelty of our recommendations and how to convince them to invest resources and to implement these solutions”… It’s a wild guess, but I’m pretty sure that it’s not unfounded :) Here are two perspectives to this challenge the way I’ve come to realise in this past month:

Perspective One: Cultural adaptation

The definition of “Culture” is that it is a shared and learned system of values, beliefs and attitudes.  One of the first courses in the MBA was “managing across cultures”: Although we only discussed one dimension of culture which were cultures across nationality, this concept seems to be just as relevant today for the culture of the school and that of the corporations is quite different. 

While the MBA year challenges us to constantly think “outside the box”, we are often required to think “inside the box” to come up with improvement ideas in companies… To be honest, to hear words like “global standards must be respected”, “this is how it’s been done for ages” and “system wise, this is not feasible” can be disorientating after having spent a year in MBA learning that these stereo types must be broken. One might argue that these barriers can indeed be broken by using change management fundamentals, but unfortunately 2 months is simply not enough time for that. Ok, so to be successful in company projects, we need to adapt quickly to a different culture. Unfortunate, but necessary adaptation. I doubt an MBA by itself can help us here… to a large extent it depends on emotional intelligence. I wonder if this is the primary reason why companies often complain that students from certain schools (often consisting young students with great GMAT scores) are too academically focused! Fortunately, I think that won’t be a problem for Vlerick for the average age and average experience of students is far higher than most MBA schools (assuming there is high correlation between maturity and age/experience).

Perspective two: Distorted view of Creativity

We often go back to the companies with “break-through” solutions which often are in fact “begin from scratch and do things completely differently” solutions :) The trouble here is that students will often go for “sexier” and high impact solutions because we after all want to begin changing the world even before we graduate and yet the companies have zero tolerance for any solution which has high risk (large variation in the chances) of success and therefore prefer only incremental improvements in small phases which will sum into significant savings. Students want “revolution” and companies want “evolution”.

Here’s the simple truth: designing solutions with “revolutionary” approach is relatively simple compared to “evolutionary” approach while implementing “revolutionary” changes is exponentially more difficult compared to “evolutionary” changes. Students often design, Companies Implement :) the fact that we come up with revolutionary solutions only means we took the easy path and does not by any chance mean we were are our creative best :)

We are all in the final phase of MBA: The in-company project.

If my guess is right, most of my classmates are, just like my partner and I, struggling with one big challenge right now… “How to convince large corporations to appreciate the novelty of our recommendations and how to convince them to invest resources and to implement these solutions”… It’s a wild guess, but I’m pretty sure that it’s not unfounded :) Here are two perspectives to this challenge the way I’ve come to realise in this past month:

Perspective One: Cultural adaptation

The definition of “Culture” is that it is a shared and learned system of values, beliefs and attitudes.  One of the first courses in the MBA was “managing across cultures”: Although we only discussed one dimension of culture which were cultures across nationality, this concept seems to be just as relevant today for the culture of the school and that of the corporations is quite different. 

While the MBA year challenges us to constantly think “outside the box”, we are often required to think “inside the box” to come up with improvement ideas in companies… To be honest, to hear words like “global standards must be respected”, “this is how it’s been done for ages” and “system wise, this is not feasible” can be disorientating after having spent a year in MBA learning that these stereo types must be broken. One might argue that these barriers can indeed be broken by using change management fundamentals, but unfortunately 2 months is simply not enough time for that. Ok, so to be successful in company projects, we need to adapt quickly to a different culture. Unfortunate, but necessary adaptation. I doubt an MBA by itself can help us here… to a large extent it depends on emotional intelligence. I wonder if this is the primary reason why companies often complain that students from certain schools (often consisting young students with great GMAT scores) are too academically focused! Fortunately, I think that won’t be a problem for Vlerick for the average age and average experience of students is far higher than most MBA schools (assuming there is high correlation between maturity and age/experience).

Perspective two: Distorted view of Creativity

We often go back to the companies with “break-through” solutions which often are in fact “begin from scratch and do things completely differently” solutions :) The trouble here is that students will often go for “sexier” and high impact solutions because we after all want to begin changing the world even before we graduate and yet the companies have zero tolerance for any solution which has high risk (large variation in the chances) of success and therefore prefer only incremental improvements in small phases which will sum into significant savings. Students want “revolution” and companies want “evolution”.

Here’s the simple truth: designing solutions with “revolutionary” approach is relatively simple compared to “evolutionary” approach while implementing “revolutionary” changes is exponentially more difficult compared to “evolutionary” changes. Students often design, Companies Implement :) the fact that we come up with revolutionary solutions only means we took the easy path and does not by any chance mean we were at our creative best :)

Slovakia!

Last Wednesday, after finding out that the office will be closed until Monday, I decided that I must do something adventurous… I decided a really long drive would be fun. I met my classmates in Leuven at 11 PM on Wednesday and persuaded them to drive to Bratislava. 9 hours later, on Thursday morning at 830 AM, we hit the road… By Sunday Midnight, we had travelled nearly 3000 Kms: to and back from Slovakia! Slovakia is a beautiful country, but I will remember this trip for the sheer audacity of deciding to travel so far without informing anyone and without worrying about “what if” and thinking about “can we”… the attitude was “lets do it”…

It’s the kind of trip on which you realise just how precious freedom is… I’ll be absolutely proud of this trip when I cannot afford to do it anymore…  It’s also no coincidence that this trip happened just a few weeks before we graduate… such company of friends who are open for adventure and who see unlimited possibilities is not something we find in office or among family… if we do, we are very lucky! By the way, I was lucky also because I met an amazingly kind person!! It was a chance meeting and a fascinating one… its truly amazing how life throws surprises each time we ask for one… all that we need to do is ask :)

Here are some snaps from the trip…

Business Plan posted!

Having spent three full months on creating a business plan, just four days before our group’s business plan was due for the final presentation, I told my freinds that I wanted to work on a different plan and make the presentation alone, their first reaction was “ashwin, are you drunk?”.. hehe… it was by far the craziest thing I did this year (academics wise)… but I’m glad I did it. It was quite an expereince to complete the entire plan alone in 4 days.

Our scores for business plans are out today and I passed :) But I feel all that effort just to pass is not fair. So I’ve decided to post the business plan document and presentation on the net just incase it is useful (I doubt it) to anyone interested…

The documents are here!!

Work Life Balance

It’s amazing how we use phrases without ever understanding what they really mean… recently, during one of the conversations, a manager told me that he would like to reduce complexity in the organization. I immediately nodded to acknowledge, but then when I wondered what “complexity” meant… I had no idea, “Reducing Complexity in the organization” felt as much like an abstraction as “understanding shapes of clouds”.

One of the best definitions I came across was “Complexity arises when an increasing number of independent variables begin interacting in interdependent and unpredictable ways”… Therefore the reasoning was that reducing complexity can be achieved by either a) decreasing the number of variables, b) reducing opportunities for interaction or c) reducing unpredictability. In an organizational design context this either means reducing number of independent roles (or people), separating the organization into different departments with specific focus or designing management controls in a way that it becomes easy to monitor and forecast the interactions… the choice of action would then depend upon the cost and the potential benefit of implementing actions a, b or c.

Unfortunately, firms get scared just at the thought of such analysis and to realize that some concrete actions are required to “reduce complexity”, therefore they feel comfortable merely discussing “complexity” as an abstraction and not do much about it :) Is it just companies… of course not, it’s also individuals… How about each of us wanting to achieve work-life balance! Do we even understand what work-life balance means?! I wondered!!

If work and life must be balanced, then they must be different because there is no point in balancing things that are homogeneous… To understand what is (supposed to be) different between work and life, we need to first of all understand what work is and what life is!

What is work? Work is a legally binding contractual commitment with very less flexibility in terms and conditions. In fact the contract when looked at the totality of implicit terms and conditions is so brutal that it even restricts who an employee can and cannot talk to (or let’s say express his opinions freely to) and I say that in spite of factoring in the open door culture! Imagine an employee talking to the customer’s Vice president while he is only authorized to talk to the operations manager…Work is also a binding contract which simply will not give the employee any opportunity to contribute more than what is asked of him either because the firm does not see the benefit of the marginal reward for the marginal effort of employee or even worse because the firm is afraid of disturbing the sanity of hierarchical structure… Come to think of it, this is the nature of most corporate positions irrespective of whether the person works in McKinsey or Ford and irrespective of whether he is a financial analyst or CEO. Work is that part of life which is defined by a binding contract filled with constraints and it is for good reason that it is that way because firms exist purely in circumstances where free markets fail!

What is life? Ouch, that’s a tough one! In the context of work life balance discussion, let’s just describe life as (supposed to be) not a contractual but voluntary commitment to oneself and other relevant stake holders :) and with more flexibility in terms and conditions. Simply put life must have lesser constraint in comparison to work. Therefore what we real should balance is the time we spend living that part of life which is not driven by us because it has many constraints and is inflexible (i.e. work) and time spent on living the other part which truly allows us to do everything we want to do because it is free of constraints and is flexible.

Unfortunately, life, just like work, has many constraints like the maximum money available which translates into our ability to doing things we want to do and few commitments which although voluntary at the beginning become contractual after a while like family, marriage and kids. So here’s the dilemma… firstly, how to make sure life has little constraints and then once that is achieved how to make sure we balance the time spent in these two different parts… Not an easy equation to crack…

Many strategies exist; either find a job that will give the flexibility to do whatever one wants to do… (I guess successful creative artist partly belong to this category), or find partners and friends who will support one with whatever he or she wants to do. But here’s what is known about the most frequently pursued strategy: slog it out at work (the constrained environment) all your life so that one can earn enough (actually maximum) money which should enable the person to break as many constraints as possible… well… there are no simple answers, but unfortunately balancing work and life is not as simple as maximizing revenue :)

Vlerick MBA Podcast

Here’s a link to MBA podcast of the school… The podcast can also be downloaded here

It gives an overview of the MBA program from different points of view: couple of my classmates, the dean, director of MBA program, an assitant professor and business development director. Among the two students who feature in the podcast are Andrew who is one of the funniest and finance guru and Corrinne who I will remember for how she described her bicycle… I was expecting she would describe it as conveneince, but she called it freedom : )

Diminishing returns

Two years back, during the stock market boom, one of my friends told me that making money had become too easy and it can’t last too long. last week, I heard a similar observation from a business unit manager, he said making money was so easy a year back that he was fine if the company created jobs even at the cost of efficiency, but in this new reality, he can’t afford budget for expensive labor unless they prove their worth. We seem to have come a full circle in the economic cycle and don’t know where we stand at the moment… and this has significant implication about how we view future MBA opportunities.

Expectation of returns on practically every investment decision made during the boom period must be tempered down: irrespective of whether the investment was in a house, equity stock or education! Expectation of 12-24 month payback time for the investment in MBA is already moving north towards 36-60 months! And I’m still talking about the 30-40K MBA, for the folks who invested in 60-80K MBA… well, what can I say? :)

Curiously though, while there is a direct relationship between the economic climate and demand for most asset classes, the relationship between economic climate and demand for MBA (if you consider MBA as an asset) is inversely related which means that while prices for most asset class will decrease during a recession, an MBA will become more expensive in the next few years. Come to think of it, its because the business school’s value proposition is not merely a function of actual costs and benefits for the customer, instead it is to a large extent determined by total opportunity cost (If the prospective student has lost his job or is not expecting any salary increase, there is little opportunity cost) and the shadow price (If job losses become more imminent, the price prospective students will pay for increasing probability of success even by few percentage points increases significantly) of education.

Will the situation change in the near future? I hope so… Each time I tell my classmates that the economy might not turn around for the next 2-3 years, the defense I hear is about how capital markets are bouncing back! Well, yes they are bouncing back and I haven’t ventured into any analysis here… but the stock prices could bounce back either because the actual EPS trend up or because the WACC goes down. If the capital market bounce back is a function of decreasing WACC, then it is little indication of the real health of economy.

Real world

Benefits we receive from MBA can be truly subtle and almost unnoticed at times.

It’s been a few weeks since I entered the “real world” after MBA classes and I have noticed one striking difference in attitude in comparison to pre-MBA days. I’m absolutely at ease at having supposedly “novel” ideas rejected. Come to think of it… if these ideas were rejected 2 years back, behind my smile would be hidden an absolute remorse about the hierarchical structure of firms and I would have jumped to the conclusion that the whole organization has conspired against a brilliant employee for the fear of competition :)

Now, the reaction is completely different, when the Strategy Director says that the hypothesis is novel and well founded and the same hypothesis is rejected by the Managing director, my first reaction is that the Strategy directors’ leadership style is of the “Good King” and the BU director is the “Warrior” and therefore the presentation has to be customized. Exercise about how to communicate to different personality types was merely fun during the MBA and yet, they seem to gain unprecedented importance in this context, it really helps. The hypothesis was indeed accepted after alterations!

Also, looking at an issue from multiple points of view comes so naturally, an issue can be looked at from organizational design, measurement and attribution, economic theory of agency, competitive framework, management control, alignment of goals or a number of other ways… all relevant, some more than others… So if one of the hypotheses is rejected, the urge is to go work on an alternate hypothesis immediately and with ease… that reduced the need to defend the original idea for the fear of not being able to come up with any other remotely well founded hypothesis. The advantage of looking at the issue from different perspectives of course is that issues which look like a huge wall when looked at from a different POV appear merely as a thin facade… its simplifies complicated problems.

Finally, those dreaded MBA case studies seem to add value most in the understanding of one specific aspect of the firms: Competing priorities and conflicts. Even before presenting ideas, we begin to think about how it affects different stakeholders and how to tackle objections. Just the mere fact that one thinks about different stakeholders and realises that it is only natural to have objections irrespective of the solutions’ novelty has a significant (positive) impact on attitude!

 

Benefits we receive from MBA can be truly subtle and almost unnoticed at times.

It’s been a few weeks since I entered the “real world” after MBA classes and I have noticed one striking difference in attitude in comparison to pre-MBA days. I’m absolutely at ease at having supposedly “novel” ideas rejected. Come to think of it… if these ideas were rejected 2 years back, behind my smile would be hidden an absolute remorse about the hierarchical structure of firms and I would have jumped to the conclusion that the whole organization has conspired against a brilliant employee for the fear of competition :)

Now, the reaction is completely different, when the Strategy Director says that the hypothesis is novel and well founded and the same hypothesis is rejected by the Managing director, my first reaction is that the Strategy directors’ leadership style is that of the “Good King” and the BU director is a “Warrior” type leader and therefore the presentation has to be customized. Exercises about how to communicate to different personality types was merely fun during the MBA and yet, they seem to gain unprecedented importance in this context, it really helps. The hypothesis was indeed accepted after alterations!

Also, looking at an issue from multiple points of view comes so naturally, an issue can be looked at from organizational design, measurement and attribution, economic theory of agency, competitive framework, management control, alignment of goals or a number of other ways… all relevant, some more than others… So if one of the hypotheses is rejected, the urge is to go work on an alternate hypothesis immediately and with ease… that reduces the need to defend the original idea for the fear of not being able to come up with any other remotely well founded hypothesis. The advantage of looking at the issue from different perspectives of course is that an issue which look like a huge wall, when looked at from a different POV appears merely as a thin facade… it simplifies complicated problems.

Finally, those dreaded conflict laden MBA case studies seem to add value most in the understanding of one specific aspect of firms: Competing priorities and conflicts. Even before presenting ideas, I begin to think about how it affects different stakeholders and how to tackle objections. Just the mere fact that I think about different stakeholders and realise that it is only natural to have objections irrespective of the solutions’ novelty has a significant (positive) impact on attitude!