Category Archives: Corporate Life

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Corporate Life, Quantitative Finance, Work and Life

Subprime: When Good Intentions Turned Sour

As the world is still feeling the reverberations of the 2008 global financial crisis, a lot of blame has been directed onto subprime lending, and in particular mortgages, as the cause of much of the economic meltdown. However, subprime mortgages had their basis in good intentions, with their initial introduction aimed at helping less well-off families from getting on the housing ladder.

In 1999, Bill Clinton, perhaps the United States’ most equality driven president, asked the now notorious Fannie Mae, which at the time was America’s largest underwriter of home mortgages, to expand home loans to more people on low and moderate incomes. At the time, this was seen as a rather egalitarian move, allowing people without access to normal levels of borrowing, such as a credit card balance transfer or an overdraft, to buy their own home.

Reducing Risk

The problem with subprime loans was not in the initial intentions, but in the way banks tried to limit the risk that lending money to people with low incomes posed, whilst at the same time, make more money on the transaction. Of course, any money lent on a property has good security in the bricks and mortar. However, getting a return on any mortgage takes years and banks wanted a quicker way of making money on these subprime loans, while also limiting any potential risk. So they turned to what was seen as one of the greatest financial innovations of the 20th century, securitization.

Securitization is when banks bundle up loans into saleable packages, which they sell on to one another. Because the interest on subprime loans was much higher than normal loans, due to the credit risk of the borrowers, these securitized subprime packages offered large long-term rewards for buyers. By selling the loans on, banks reduced their risk, while at the same time the buyers of securities had the promise of a valuable long-term investment, which was seen as a win-win situation for all.

Rise and Fall of the Subprime

Banks began lending money to poorer and poorer people, tempting them with low initial interest rates. As a result, subprime lending doubled in just over a year, and because housing prices continued to rise, even those lenders the banks knew could never afford to continue repayments, the repossession rates would cover the loan and remove any risk. Until house prices fell.

Fuelled by record foreclosures as subprime borrowers failed to maintain their payments, house prices plummeted, as did confidence in subprime securities. What was once seen as a win-win investment opportunity now became toxic. The result was the loss of billions in the banking industry and the start of the worst financial crisis in 80 years. However, the victims in all this wasn’t the failed banks and investors left with worthless securities, but the innocent, low-income home owner, who, thanks to the greed and impatience of bankers and investors, ended up losing their homes.

Betting on Failure is no Way to run an Economy

The most powerful word in the financial markets is confidence. No matter how well or how badly a business, security or even a currency is doing, if it can maintain market confidence, the price will remain high. If the market for some reason loses confidence, then regardless of what the balance sheet says, prices plummet. So, with confidence playing such an important part of maintaining a healthy economy, the betting on failure could be argued to be one of the most toxic aspects of the entire economic system.

Hedge Funds

The phrase, “hedging your bets,” derives from bookmakers, who, when faced with a customer placing a substantial wager, hedge the bet, by placing their own wager elsewhere. And hedge funds are meant to work in the same way, reducing risk by insuring investments against failure.

Hedge funds deal in derivatives, an insurance contract that pays out when things go wrong. Derivatives are not necessarily a bad thing, companies and banks need some form of system to protect themselves from unforeseen events. However, during the global financial crisis, the derivatives market was poorly regulated, allowing a web of interlinked derivatives to accumulate across the insurance and financial services industry. As soon as a problem, such as the subprime crisis developed, financial insurers were left having to pay out huge sums. They then tried to recoup these losses by buying even more derivatives, causing a spiral of accumulating debt.

In the meantime, hedge funds were making so much money by betting on failures, their very presence was driving down confidence and leading to even more failures, which generated even more profits for the hedge funds and even more debt for the financial institutions. This resulted in the huge bailout figures that governments around the world have had to pay. The only winners in this whole fiasco have been the hedge fund companies. While derivatives and hedge funds didn’t start the financial crisis, this toxic investment in failure, certainly escalated it.

Columns, Corporate Life, Quantitative Finance, The Wilmott Magazine, Topical, Work and Life

In Our Defense

The financial crisis was a veritable gold mine for columnists like me. I, for one, published at least five articles on the subject, including its causes, the lessons learned, and, most self-deprecating of all, our excesses that contributed to it.

Looking back at these writings of mine, I feel as though I may have been a bit unfair on us. I did try to blunt my accusations of avarice (and perhaps decadence) by pointing out that it was the general air of insatiable greed of the era that we live in that spawned the obscenities and the likes of Madoff. But I did concede the existence of a higher level of greed (or, more to the point, a more sated kind of greed) among us bankers and quantitative professionals. I am not recanting my words in this piece now, but I want to point out another aspect, a justification if not an absolution.

Why would I want to defend bonuses and other excesses when another wave of public hatred is washing over the global corporations, thanks to the potentially unstoppable oil spill? Well, I guess I am a sucker for lost causes, much like Rhett Butler, as our quant way of tranquil life with insane bonuses is all but gone with the wind now. Unlike Mr. Butler, however, I have to battle and debunk my own arguments presented here previously.

One of the arguments that I wanted to poke holes in was the fair compensation angle. It was argued in our circles that the fat paycheck was merely an adequate compensation for the long hours of hard work that people in our line of work put in. I quashed it, I think, by pointing out other thankless professions where people work harder and longer with no rewards to write home about. Hard work has no correlation with what one is entitled to. The second argument that I made fun of was the ubiquitous “talent” angle. At the height of the financial crisis, it was easy to laugh off the talent argument. Besides, there was little demand for the talent and a lot of supply, so that the basic principle of economics could apply, as our cover story shows in this issue.

Of all the arguments for large compensation packages, the most convincing one was the profit-sharing one. When the top talents take huge risks and generate profit, they need to be given a fair share of the loot. Otherwise, where is the incentive to generate even more profits? This argument lost a bit of its bite when the negative profits (by which I indeed mean losses) needed to be subsidized. This whole saga reminded me of something that Scott Adams once said of risk takers. He said that risk takers, by definition, often fail. So do morons. In practice, it is hard to tell them apart. Should the morons reap handsome rewards? That is the question.

Having said all this in my previous articles, now it is time to find some arguments in our defense. I left out one important argument in my previous columns because it did not support my general thesis — that the generous bonuses were not all that justifiable. Now that I have switched allegiance to the lost cause, allow me to present it as forcefully as I can. In order to see compensation packages and performance bonuses in a different light, we first look at any traditional brick-and-mortar company. Let’s consider a hardware manufacturer, for instance. Suppose this hardware shop of ours does extremely well one year. What does it do with the profit? Sure, the shareholders take a healthy bite out of it in terms of dividends. The employees get decent bonuses, hopefully. But what do we do to ensure continued profitability?

We could perhaps see employee bonuses as an investment in future profitability. But the real investment in this case is much more physical and tangible than that. We could invest in hardware manufacturing machinery and technology improving the productivity for years to come. We could even invest in research and development, if we subscribe to a longer temporal horizon.

Looking along these lines, we might ask ourselves what the corresponding investment would be for a financial institution. How exactly do we reinvest so that we can reap benefits in the future?

We can think of better buildings, computer and software technologies etc. But given the scale of the profits involved, and the cost and benefit of these incremental improvements, these investments don’t measure up. Somehow, the impact of these tiny investments is not as impressive in the performance of a financial institution compared to a brick-and-mortar company. The reason behind this phenomenon is that the “hardware” we are dealing with (in the case of a financial institution) is really human resources — people — you and me. So the only sensible reinvestment option is in people.

So we come to the next question — how do we invest in people? We could use any number of euphemistic epithets, but at the end of the day, it is the bottom line that counts. We invest in people by rewarding them. Monetarily. Money talks. We can dress it up by saying that we are rewarding performance, sharing profits, retaining talents etc. But ultimately, it all boils down to ensuring future productivity, much like our hardware shop buying a fancy new piece of equipment.

Now the last question has to be asked. Who is doing the investing? Who benefits when the productivity (whether current or future) goes up? The answer may seem too obvious at first glance — it is clearly the shareholders, the owners of the financial institution who will benefit. But nothing is black and white in the murky world of global finance. The shareholders are not merely a bunch of people holding a piece of paper attesting their ownership. There are institutional investors, who mostly work for other financial institutions. They are people who move large pots of money from pension funds and bank deposits and such. In other words, it is the common man’s nest egg, whether or not explicitly linked to equities, that buys and sells the shares of large public companies. And it is the common man who benefits from the productivity improvements brought about by investments such as technology purchases or bonus payouts. At least, that is the theory.

This distributed ownership, the hallmark of capitalism, raises some interesting questions, I think. When a large oil company drills an unstoppable hole in the seabed, we find it easy to direct our ire at its executives, looking at their swanky jets and other unconscionable luxuries they allow themselves. Aren’t we conveniently forgetting the fact that all of us own a piece of the company? When the elected government of a democratic nation declares war on another country and kills a million people (speaking hypothetically, of course), should the culpa be confined to the presidents and generals, or should it percolate down to the masses that directly or indirectly delegated and entrusted their collective power?

More to the point, when a bank doles out huge bonuses, isn’t it a reflection of what all of us demand in return for our little investments? Viewed in this light, is it wrong that the taxpayers ultimately had to pick up the tab when everything went south? I rest my case.

Columns, Corporate Life, The Today Paper

Graceless Singaporean

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We Singaporeans have a problem. We are graceless, they say. So we train ourselves to say the right magic words at the right times and to smile at random intervals. We still come across as a bit graceless at times.

We have to bite the bullet and face the music; we may be a bit on the rude side — when judged by the western norms of pasticky grace popularized by the media. But we don’t do too badly when judged by our own mixed bag of Asian cultures, some of which consider the phrase “Thank you” so formal that it is almost an insult to utter it.

One of the Asian ways of doing things is to eat noodles like a mini vacuum cleaner. This Singaporean friend of mine was doing just that while lunching with me and our French colleague. I hardly noticed the small noises; after all, I’m from a culture where loud burps at the end of a meal are considered a compliment to the host. But our French friend found the suction action very rude and irksome, and made French comments to that effect (ignoring, of course, the fact that it is rude to exclude people by talking in a private language). I tried to explain to him that it was not rude, just the way it was done here, but to no avail.

The real question is this — do we paint a thin veneer of politeness over our natural way of doing things so that we can exude grace a la Hollywood? The thinness of this kind of grace echoes loud and clear in the standard greeting of a checkout clerk in a typical American supermarket: “How’ ya doing today?” The expected response is: “Good, how are you?” to which the clerk is to say, “Good, good!” The first “Good” presumably to your graceful enquiry after his well-being, the second expressing satisfaction at your perfect state of bliss. I once decided to play the fool and responded to the ubiquitous “How’ ya doin’?” by: “Lousy man, my dog just died.” The inevitable and unhesitating response was, “Good, good!” Do we need this kind of shallow grace?

Grace is like the grammar of an unspoken social language. Unlike its spoken counterparts, the language of social mores seems to preclude multilingualism, leading to an almost xenophobic rejection of other norms of life. We all believe that our way of doing things and our world views are the only right ones. Naturally too, otherwise we wouldn’t hold on to our beliefs, would we? But, in an increasingly flattening and globalizing world, we do feel a bit alien because our values and graces are often graded by alien standards.

Soon, a day will come when we all conform to the standards prescribed to us by the global media and entertainment networks. Our amorphous “How’ ya doin’?”s and “Good, good”s will then be indistinguishable from the prescriptions.

When I think of that inevitable day, I suffer a pang of nostalgia. I hope I can hold on to the memory of social graces judged by lesser standards — of gratitude expressed in timid smiles, affections portrayed in fleeting glances, and life’s defining bonds conveyed in unspoken gestures.

Ultimately, the collective grace of a society is to be judged, not by polished niceties, but by how it treats its very old and very young. And I’m afraid we are beginning to find ourselves wanting in those fronts. We put our young children through tremendous amount of stress, preparing them for an even more stressful life, and unwittingly robbing them of their childhood.

And, when I see those aunties and uncles cleaning after us in eating houses, I see more than our lack of grace. I see myself in my twilight years, alienated in a world gone strange on me. So let’s spare a smile, and nod a thank you when we see them — we may be showing grace to ourselves a few decades down the line.

Columns, Corporate Life, The Today Paper, Work and Life

How Friendly is too Friendly?

We all want to be the boss. At least some of us want to be the big boss at some, hopefully not-too-distant, future. It is good to be the boss. However, it takes quite a bit to get there. It takes credentials, maturity, technical expertise, people skills, communication and articulation, not to mention charisma and connections.

Even with all the superior qualities, being a boss is tough. Being a good boss is even tougher; it is a tricky balancing act. One tricky question is, how friendly can you get with your team?

At first glance, this question may seem silly. Subordinates are human beings too, worthy of as much friendliness as any. Why be stuck up and act all bossy to them? The reason is that friendship erodes the formal respect that is a pre-requisite for efficient people management. For instance, how can you get upset with your friends who show up thirty minutes late for a meeting? After all, you wouldn’t get all worked up if they showed up a bit late for a dinner party.

If you are friends with your staff, and too good a boss to them, you are not a good boss from the perspective of the upper management. If you aspire to be a high powered and efficient boss as viewed from the top, you are necessarily unfriendly with your subordinates. This is the boss’s dilemma.

From the employee’s perspective, if your boss gets too friendly, it is usually bad news. The boss will have your hand phone number! And an excuse to call you whenever he/she feels like it.

Another unfortunate consequence of accidental cordiality is unrealistic expectations on your part. You don’t necessarily expect a fat bonus despite a shoddy performance just because the boss is a friend. But you would be a better human being than most if you could be completely innocent of such a wishful notion. And this tinge of hope has to lead to sour disappointment because, if he your boss is friendly with you, he/she is likely to be friendly with all staff.

By and large, bosses around here seem to work best when there is a modicum of distance between them and their subordinates. One way they maintain the distance is by exploiting any cultural difference that may exist among us.

If you are a Singaporean boss, for instance, and your staff are all expatriate Indians or Chinese, it may be a good thing from the distance angle — cultural and linguistic differences can act as a natural barrier toward unwarranted familiarity that may breed contempt.

This immunity against familiarity, whether natural or cultivated, is probably behind the success of our past colonial masters. Its vestiges can still be seen in management here.

The attitude modulation when it comes to the right amount of friendship is not a prerogative of the bosses alone. The staff have a say in it too. As a minor boss, I get genuinely interested in the well-being of my direct reports, especially because I work closely with them. I have had staff who liked that attitude and those who became uncomfortable with it.

The ability to judge the right professional distance can be a great asset in your and your team’s productivity. However, it cannot be governed by a set of thumb rules. Most of the time, it has to be played by ear and modulated in response to the changing attitudes and situations. That’s why being a good boss is an art, not an exact science.

Columns, Corporate Life, The Today Paper

When the Going Gets Tough, Turn Around!

Elton John is right, sorry is the hardest word. It is hard to admit that one has been wrong. Harder still is to find a way forward, a way to correct one’s past mistakes. It often involves backtracking.

But when it comes to hard-headed business decisions, backtracking may often be the only thing to do. It makes sense to cut further losses when there is little point in throwing good money after bad. Such containment efforts are routine events in most establishments.

The biggest loss containment effort that I had a personal stake in happened in the US in the early nineties. I began noticing its worrying escalation in a hotel room in Washington DC. I was student delegate in the annual conference of the American Physical Society (APS). Despite the happy APS atmosphere (where many graduate students find their future placements) and the beautiful pre-cherry-blossom weather, I was a worried man because I had just seen a TV commercial that said, “Ten billion dollars for a particle accelerator??!! What the heck is it any way?”

The ten billion dollar project under attack was the so-called Superconducting Super Collider (SSC) in Texas, which was eventually shut down in 1993. The cancellation came in spite of a massive initial investment of about two billion dollars.

To me, this cancellation meant that more than two thousand bright and experienced physicists would be looking for jobs right around the time I entered the job market. This concern represented my personal stake in the project; but the human impact of this mammoth backtracking was much deeper. It precipitated a minor recession in the parts of Dallas to the south of the Trinity River.

Similar backtracking, though at a much smaller scale, may happen in your organization as well. Let’s say you decided to invest two million dollars in a software system to solve a particular business problem. Half a million dollars into the project, you realize that it was a wrong solution. What do you do?

It may look obvious that you should save the company a million and a half by stopping the project. This decision is exactly what the collective wisdom of the US Congress arrived at in 1993 regarding the SSC. But it is not that simple. Nothing in real life is that simple.

Corporate backtracking is a complex process. It has multiple, often interconnected, aspects that have to be managed with skill.

If you decide to backtrack, what does it say about your business acumen? Will it trigger a backlash from the top management accusing you of poor judgment? In other words, will your name be so much in the mud that you would find it impossible to secure a job and support your family?

Let’s say it really wasn’t your fault and you had valid arguments to convince everybody of your innocence. Would that make it simple enough to pull the plug on the project? In all probability, it would not, because all big projects involve other people, for no man is an island. Stopping a project half-way through would probably mean sacking the whole project team.

This human cost is something we have to be aware of. It is not always about dollars and cents. If you are kind soul, you would have to move the team to some other (potentially unproductive) project, thereby eroding the savings that would’ve accrued from stopping the project. Wouldn’t it have been better to have continued with the original project, doomed though it was?

In most corporate cases, it will turn out to be wise to shutdown doomed projects. But don’t underestimate the costs involved. They are not always counted in monitory terms, but have human dimensions as well.

It is far wiser never to embark on dubious projects. When you must get involved in uncertain projects, review your exit options carefully. For instance, would it be possible to reshape the project in a different but still salvageable direction?

And if and when you do have to shut them down, do it with decisiveness. Do it with skill. But most importantly, do it with decency and compassion.

Columns, Corporate Life, The Today Paper

Rumour Mills

Employees seek insights into their organization’s heading. And they should, because what their organization does has a direct impact on their well-being. If your organization is planning to retrench 50% of its staff, for instance, you’d better start looking for new job right away.

Who do you turn to when you pine for information? Your management would have you listen to them. From the employee’s perspective, this may not be the smartest move. But fret not, there is an alternative.

There is a city underground. Parallel to the world of corporate memos and communication meetings, this rumour city trades information, often generating it as needed.

Employees flock to the rumour mills, not out of their inherent malevolence for their employers, but because of a well-founded and mutual mistrust. Management tends to be cautious (and therefore less than candid) with their announcements, while over 80% of office rumours turn out to be accurate, as some studies show.

Let’s take a hypothetical situation. Suppose five years ago, your CEO took to the podium and declared that there would be absolutely no retrenchments. How many of you would have believed it? Those who believed would almost certainly wish they had listened to the grapevine instead.

This credibility gap that a typical management team suffers from can be addressed only though open and candid communication. Therein lies the rub. The management cannot always be as candid as they would like to be. And, they certainly cannot afford to be as candid as the employees would like them to be.

Lack of candour in an atmosphere of uncertainty breeds rumour. Rumours, as defined in psychology, are hypotheses with widespread impact. They abound when the management refuses to trust the employees with strategic information. This lack of trust and information leaves them with no choice but to interpret the developments themselves. In such interpretations lie the origins of office rumours.

Rumours are not to be confused with gossip. While rumours are based on conjecture and are presented as future, corporate-wide eventualities, gossip can be idle or with malicious intent directed at individuals. And gossip is usually presented as fact. In highly competitive settings, gossip can inflict irreparable damage on unsuspecting victims.

Once a rumour attains a high level of credibility, the top brass will be forced to talk. But the talk has to be candid and serious. And it has to be timely. If they wait for too long, their attempts at a tête-à -tête would resemble feeble attempts at damage control. And if the talk is a mere torrent of clichés and rhetoric, it will be taken as an effort to gloss over potentially catastrophic changes. In fact, such weak communication fuels more rumour than it quells.

Given that critical job-related information usually flows down the grapevine, the employees are going to talk. The only sure-fire strategy for any management is to make use of the underground rumour mill — the classic “if you can’t beat’em, join’em” paradigm.

If you are a part of the top brass, here is what you can do. Circulate as much accurate and timely information as you possibly can. If you cannot do it officially through formal channels, try informal ones, such as lunches and pantries. This way, you can turn the rumour mills to serve your purpose rather than let them run amok.

Do not underestimate the power of the grapevine, lest all your corporate communication efforts should come to naught.

Columns, Corporate Life, The Today Paper, Work and Life

Stress and a Sense of Proportion

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How can we manage stress, given that it is unavoidable in our corporate existence? Common tactics against stress include exercise, yoga, meditation, breathing techniques, reprioritizing family etc. To add to this list, I have my own secret weapons to battle stress that I would like to share with you. These weapons may be too potent; so use them with care.

One of my secret tactics is to develop a sense of proportion, harmless as it may sound. Proportion can be in terms of numbers. Let’s start with the number of individuals, for instance. Every morning, when we come to work, we see thousands of faces floating by, almost all going to their respective jobs. Take a moment to look at them — each with their own personal thoughts and cares, worries and stresses.

To each of them, the only real stress is their own. Once we know that, why would we hold our own stress any more important than anybody else’s? The appreciation of the sheer number of personal stresses all around us, if we stop to think about it, will put our worries in perspective.

Proportion in terms of our size also is something to ponder over. We occupy a tiny fraction of a large building that is our workplace. (Statistically speaking, the reader of this column is not likely to occupy a large corner office!) The building occupies a tiny fraction of the space that is our beloved city. All cities are so tiny that a dot on the world map is usually an overstatement of their size.

Our world, the earth, is a mere speck of dust a few miles from a fireball, if we think of the sun as a fireball of any conceivable size. The sun and its solar system are so tiny that if you were to put the picture of our galaxy as the wallpaper on your PC, they would be sharing a pixel with a few thousand local stars! And our galaxy — don’t get me started on that! We have countless billions of them. Our existence (with all our worries and stresses) is almost inconceivably small.

The insignificance of our existence is not limited to space; it extends to time as well. Time is tricky when it comes to a sense of proportion. Let’s think of the universe as 45 years old. How long do you think our existence is in that scale? A few seconds!

We are created out of star dust, last for a mere cosmological instant, and then turn back into star dust. DNA machines during this time, we run unknown genetic algorithms, which we mistake for our aspirations and achievements, or stresses and frustrations. Relax! Don’t worry, be happy!

Sure, you may get reprimanded if that report doesn’t go out tomorrow. Or, your supplier may get upset that your payment is delayed again. Or, your colleague may send out that backstabbing email (and Bcc your boss) if you displease them. But, don’t you see, in this mind-numbingly humongous universe, it doesn’t matter an iota. In the big scheme of things, your stress is not even static noise!

Arguments for maintaining a level of stress all hinge on an ill-conceived notion that stress aids productivity. It does not. The key to productivity is an attitude of joy at work. When you stop worrying about reprimands and backstabs and accolades, and start enjoying what you do, productivity just happens. I know it sounds a bit idealistic, but my most productive pieces of work happened that way. Enjoying what I do is an ideal I will shoot for any day.

Columns, Corporate Life, The Today Paper

Knowledge Silos

We know a lot. By “we,” I mean humanity as a whole. We know so much that it is impossible for any one of us to know more than a fraction of our total knowledge. This is why we specialize.

Specialization is good. It lets us cut deep into a specific field of endeavor; but at the expense of a broad overview of everything, naturally. Specialization is expected of professionals. You wouldn’t be happy if you found out that your dentist is, in fact, a well-known philosopher as well. Or that your child’s ENT surgeon secretly teaches astrophysics in the local university.

Isn’t there a danger lurking behind our habit of demanding super specialized silos of knowledge? One obvious danger is the loss of synergy and potential innovation. A case in point — a particle physicist at the European Organization for Nuclear Research (CERN) faces the problem of accessing various files on different computers and networks. Being conversant in computing issues, the physicist devices a nice way of describing the file (or, as it is known now, the resource) and suddenly the first URL (Universal Resource Locator) is born. The rest is history — we have the World Wide Web, the Internet. Fifteen years later, you have e-commerce and YouTube!

If CERN had insisted that their physicists do only physics and leave their computing problems to the IT department, the Internet may not have materialized at all. Or, it may have taken a lot longer to materialize.

The need for specialization is not limited to individuals. It permeates into the modern workplace in the form of a typical division of labor such as HR, Finance, IT and Business. This division has worked well for ages. But every once in a while, the expertise in such silos becomes so split and scattered that the organization loses sight of its basic objective. People in the silos begin work against each other, competing for resources and recognition, rather than collaborating for common success.

The most common pariah in a typical organization is the IT department. These poor folks always get shouted at if anything at all goes wrong in the system. But when everything is working fine, nobody even notices them. In today’s age of ubiquitous computer literacy, why not assume a bit of system responsibility so that the turnaround time in PC troubleshooting (and consequently productivity) can be improved?

In fact, we know why. When it comes to computers, there is no limit to how bad things can get. As the IT proverb says, to err is human, but to completely foul up things requires a computer. End users may screw up the system so completely that even a competent IT department (a rare commodity) may find it impossible to restore normalcy. But, in order to fight this self-destructive (though well-intentioned) tendency, IT departments have gone to the other extreme of making it so bureaucratic and practically impossible to get their help in anything at all!

Another group that gets a bad rap in a highly regulated organization is the auditors. Their thankless job is to look over everybody’s shoulder and make sure that they are following the rules of the game (or rather, complying with policies and regulations). Auditors’ noble intentions get eclipsed by one fatal flaw: they seem to measure their success by how many violations they can find. Instead of working hand in hand with those being audited, the auditors come across as though they are conspiring against the rest.

There is productivity to be gained by blurring the edges of rigid silos in organizations. When silos talk to each other, teamwork happens and those in the silos realize that they all work toward a common goal.

Columns, Corporate Life, The Today Paper, Work and Life

Internet Reading

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Major changes are afoot. They have been afoot for the last twenty years. I’m talking about how we learn things, how we read, how we do basic arithmetic and so on.

In high school, I used logarithm tables to work out results in physics and chemistry experiments. Calculators were not allowed. Though inconvenient, this practice honed my arithmetic skills — skills that calculators and spreadsheets have eroded by now.

Similar erosion is taking place in our reading skills as well. We don’t read to retain information or knowledge any more. We search, scan, locate keywords, browse and bookmark. The Internet is doing to our reading habits what the calculator did to our arithmetic abilities.

Easy access to information is transforming our notion of (dare I say, respect for?) knowledge in a fundamental way. In a knowledge economy, knowledge is fast becoming a cheap commodity. We don’t need to know stuff any more; we just need to know how to find it.

I was talking to a lecturer the other day. According to him, a good lecturer is not the one who knows most and has a deep understanding of the subject, but the one that can locate the answer the fastest.

The power of instant information came with the Internet, which made experts of all of us. We can now make intelligent comments and informed decisions on anything.

Suppose, for instance, your child’s doctor recommends the procedure “myringotomy,” quite possibly something you have never heard of before. But you can Google it, read (sorry, browse) the first couple of search results, and you will know the rationale behind the doctor’s advice, the exact procedure, its risk factors and benefits, and so on. In ten minutes, you will know what took the doctor years of hard work to learn.

This easy access to knowledge may, quite mistakenly, diminish your respect for the medical degree. This diminished reverence for knowledge is unwise; a little knowledge is a dangerous thing. A doctor’s expertise is not so much in memorizing a webpage worth of information, but also in knowing all the special circumstances where that information doesn’t apply. Besides, the webpage you happened to read may be just plain wrong. We should be careful not to mistake easy information for deep knowledge. Let’s guard our respect for true knowledge and wisdom despite our access to ready information.

Such misguided lack of respect is evident in the workplace as well, where managers think they can always hire specialized knowledge at will. I had a friend who was planning to roll out a product using Bluetooth, back when it was an emerging technology. I pointed out the obvious flaw in his proposal — he didn’t know much about Bluetooth. His reply was, “No big deal! I’ll just hire somebody who does!”

My worry is, when everybody wants to hire a Bluetooth expert and nobody wants to know how it works, there won’t be an expert any longer.

Knowledge is not cheap, although our easy access to it through the Internet may indicate otherwise. When we all become users of information, our knowledge will stop at its current level, because nobody will be creating it any more.

We are not there yet, but I worry that we are heading that way. I worry about the support structure of our knowledge base. How will our knowledge empire stand when all its foundations are gone?

Columns, Corporate Life, The Today Paper

To Know or Not To Know

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Technical knowledge is not always a good for you in the modern workplace. Unless you are careful, others will take advantage of your expertise and dump their responsibilities on you. You may not mind it as long as they respect your expertise. But, they often hog the credit for your work and present their ability to evade work as people management skills.

People management is better rewarded than technical expertise. This differentiation between experts and middle-level managers in terms of rewards is a local Asian phenomenon. Here, those who present the work seem to get the credit for it, regardless of who actually performs it. We live in a place and time where articulation is often mistaken for accomplishments.

In the West, technical knowledge is more readily recognized than smooth presentations. You don’t have to look beyond Bill Gates to appreciate the heights to which technical expertise can take you in the West. Of course, Gates is more than an expert; he is a leader of great vision as well.

Leaders are different from people managers. Leaders provide inspiration and direction. They are sorely needed in all organizations, big and small. They are not to be confused with middle-level folks who keep harping on the “big picture,” the “value-chain” and such, and spend all their working hours in meetings. You know who I am talking about. Why should they get such hefty salaries when they know and do so little?

Unlike people mangers, technical experts are smart cookies. They can easily see that if they want to be people managers, they can get started with a tie and a good haircut. If the pickings are rich, why wouldn’t they?

Going the other way is a lot harder though. For a pure people manager to become a technical expert, it takes a lot more than losing the tie. But why would anybody want to be an expert in the current corporate climate here? Slim pickings, really.

Is it time to hide your knowledge, get that haircut, grab that tie, and become a people manager? It comes down to your personal choice. Knowledge gives you technical authority and a sense of indispensability. But it also sets you up for a stunted career progression. So the choice is between fulfillment and satisfaction on the one hand, and convenience and promotions on the other.

I wonder whether we have already made our choices, even in our personal lives. We find fathers who cannot get the hang of changing diapers or other household chores. Is it likely that men cannot figure out washing machines and microwaves although they can operate complicated machinery at work? We also find ladies who cannot balance their accounts and estimate their spending. Is it really a mathematical impairment, or a matter of convenience?

At times, the lack of knowledge is as potent a weapon as its abundance. Yes, knowledge is a double-edged sword. Use it wisely!