West's Financial Fallout

You still do not believe they're in crisis? Give it a second look, if it's so. Of course, they're shaken, but not blasted away yet. Yes, I am talking of financial crisis. I cannot go into deeper details that of causes and effects, the consequences, etc. They need profound insights for a general outlook. I only wish here to quote Roger C. Altman's ('he is Chair and CEO of Evercore Partners, was U.S. Deputy Treasury Secretary in 1993-94') article The Great Crash, 2008: A Geopolitical Setback for the West. He says:

"The financial and economic crash of 2008, the worst in over 75 years, is a major geopolitical setback for the United States and Europe. Over the medium term, Washington and European governments will have neither the resources nor the economic credibility to play the role in global affairs that they otherwise would have played. These weaknesses will eventually be repaired, but in the interim, they will accelerate trends that are shifting the world's center of gravity away from the United States."

The article appeared in Foreign Affairs,

Jan/Feb, 2009, Vol 88, No. 1.

Sir Sharukh Got it Wrong

In explaining U.S. or West's financial fallout, even though he went to great lengths, talked of consequences and root causes as per his wisdom. But, as per Roger C. Altman he is not correct. Roger Altman was U.S. Deputy Treasury Secretary in 1993-94.

Sir Sharukh Irfan (Forman C. C. Univ.'s accounting professor) is of the view that this meltdown of U.S. markets was due to the collapse of subprime mortgage market in the United States and consequently housing prices collapsed and thus emerged the crisis at the surface. The same reason has been attributed by Altman, in his article in the latest Foreign Affairs magazine, as 'conventional wisdom'. And, as per Sir, that at the bottom the preceding reason lied, and naturally, it had various consequences.

While, on the other hand, Roger says:

"This is not correct [that crisis is due to collapse of subprime mortgage market and housing prices]; these were themselves the consequence of another problem. The crisis' underlying cause was the combination of very low interest rates and unprecedented levels of liquidity."*

Roger sounds more reasonable to me and especially the lethal combination he mentioned. What is your opinion on this issue? Please do share with us.

* Quoted from, The Great Crash 2008: A Geopolitical Setback for the West, Foreign Affairs, Jan/Feb, 2009, Vol 88, No. 1.

Read Harvard Business School Discussion Blogs

There are great, great masters of business, replete with knowledge far beyond ordinary mind's reach and guess what, open to you like a discussion forum. If you do not wish to benefit yourself by awesome amount of knowledge and insights then do follow this link (even if you hate it). But not for my sake.

http://discussionleader.hbsp.com/

And, also to read 500 words and executive summaries on latest and older Harvard Business Reviwe Journals, please dash in there:

http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/index.jsp

How To Discover One's Authentic Leadership?

I wish to share a bit of knowledge I acquired while working on Life Thinking Paper. It is all about discovering one's authentic leadership. And, very similar seems to be the content of this article, Discovering Your Authentic Leadership, Harvard Business Review OnPoint (Dec 2008), to that of Stephen Covey's theses [7 Habits of Highly Effective People, Habit # 1, Habit #2].

No Barbie Model of Ideal Leader in the Markets

In the very start of this extremely well-researched article, a layman's approach to becoming a leader by merely imitating and following of them, their styles, characteristic, personalities is knocked out on the basis:

 "During the past 50 years, leadership scholars have conducted more than 1,000 studies in an attempt to determine the definitively styles, characteristics, or personality traits of great leaders. None of these studies has produced a clear profile of the ideal leader. Thanks goodness." Because, "no one can be authentic by trying to imitate someone else."

Learning from Life Story

The thing which I found as most fresh and authentic was the realization of the need for "Learning from Life Story". Perhaps that is why there's a question in LTP which asks us about our past. As the scholars wrote, "It is your personal narrative that matters, not the mere facts of your life. Your life narrative is like a permanent recording player in your head." In order to find our centers, interests, passions, motivations, what we're composed and best made up for till now - look back into your life's narrative, very closely. The most perilous and difficult days of your life can be the most trans formative events and motivations for your future success.

"Discover your inspiration directly from your life stories. The trans formative experiences in your life," concludes four scholars in this section of the article. These trans formative events had been for some leaders, interviewed for this article, worst sort of events. Yet, it was by the grace of such unbearable and painful events which made them up for what they are now.

Knowing Our Authentic Self

Then comes "Knowing Our Authentic Self" Which is: "as per 75 members of Stanford Graduate School of Business's Advisory Council (Probably Sir's institute), when asked to recommend the most important capability for leaders to develop, their answer was nearly unanimous: self- awareness." Self-exploration means by using our 'self-awareness (remember habit 1) constantly exploring our 'self'. Do our friends trust us? Am I empathic? and many of these questions need to be answered, constantly throughout life so as to 'overcome blind spots." Nut a research in the Journal of Personality and Social Psychology, Nov 2008, points out that self-assessment of behaviours isn't the perfect perspective, rather no single perspective is best. So where do we stand?

"David Pottruck, former CEO of Charles Schwab... had great energy for work. He believed, "I thought my accomplishments would speak for themselves." Pottruck was shocked when his boss told him, "Dave, your colleagues do not trust."

This example highlights the need of empathic listening and seeing our behaviours from other perspectives as well. We usually deny for our mistakes. And this blind spot can only spotted well if we are able to get fresh criticisms from a circle of our close friends and family members. they'll help you know better your authentic self.

Practice Your Values and Principles

"...Even if your life hangs in balance." This is the price of authentic leadership we are to pay.

Integrate Your Life: A Life of Balance

And in the end, as Covey says, integrate your life. I liked a very beautiful expression of this principle in the article, it says:

"Think of your life as a house, with a bedroom for your personal life, a study for your professional life, a family room for your family, and a room to share with your friends. Can you knock down the walls between these rooms and be the same person in each of them."

Think about it...

Please do share if you were not able to understand any point, I'll try to explain it in the strict light of the article. I expanded my perceptions!!

________________________________

Note: All references are made from HBR OnPoint, Dec 2008, Discovering Your Authentic Leadership. By, Bill George, Peter Sims, Andrew N. McLean and Diana Mayer.

My Comment On The Post By Nazish William

Yeah, that's terrible news for banks. Moreover, you people must have heard about the historical interest-rate cuttings by England's banks, probably state banks. This shows how unstablised they've become.

Pakistani banks are yet in safe heavens. In Pakistan and Gulf Economist, abbreviated as PAGE (week 1-7 Dec.), review on Pak banks came:

"Pakistani banks have been exceptionally resilient during financial crises., primarily due to low international exposure and limited range of financial products and derivatives being almost non existent."

Moreover, in these dwindling days Pakistani banks have the capacity "in taking on more risk-weighted assets." [Sources, PAGE]

But, consumer banking in a great peril. I read in some international business journal, previous month, where Pakistan was amongst the top countries facing huge credit-debits. I feel that greed is itself poverty. And, in previous or two weeks MCB announced that it is going to drop around 450 of its consumer-sector employees. When I asked the reason from my father, who has served in MCB for a few decades, he said that they've been left with no work, i.e, consumer banking.

And, thanks for the link!

Hard Times for Detorits's Carmakers

American carmaker's are in great peril these days as the financial crisis has hit so hard and is affecting thousands of people on the main street as well. I read terrible news for these company's in The Economist. Their asstes are depleting very fast and liabilities booming high that their present condition can be figured out from this quote from this article in Economist:

"There are just two broad options: either the federal government steps in to save Ford and GM (Chrysler is probably unsalvageable) or America’s two biggest car firms must seek Chapter 11 bankruptcy protection."

A move to file for bankruptcy protection only means more bankruptcy for the carmakers, says the article.

"Consumer surveys that suggest 80-90% of prospective customers would abandon the products of a carmaker (like Ford, Gm etc) that had filed for bankruptcy protection."

And, they've valid reasons to do so:

"A car is the most expensive purchase many consumers make, and by buying a car they also enter into a long-term contract. Buyers expect their 60,000-mile warranties to be honoured, parts to be kept supplied and their dealers not to have disappeared. Used-car values are also a critical part of the deal. If the firm that made the car has gone bust, it becomes virtually unsellable secondhand."

If an airline company had gone for Chapter 11 bankruptcy protection, mentions the article, they would have been safe, because an airliner customer has business no more than a few weeks with them. Surely, it is for the fittest to survive here. However, the speculation when Congress with give auto industry bailout has come to an end, when on December 10 news came out that both parties have come to an understanding.

Now is the time for carmakers to catch the straw and save their souls, otherwise it will be too late if they miss even a nickel.

Read Articles on the Present World Financial Crisis

Click on the headings to read articles. I have summried in a sentence or two about the article. Have pleasure readings.

On Recession and Financial Crisis:

1. Auto Industry Bailout Sends U.S. Dollar Lower in Currency Trading

Says that US dollar stuggling in the market because of  "the announcement that Congress and Detroit have come to an understanding regarding an auto industry bailout."

2. How much dollars have been allocated in US Bailout and its elements

Heading suffices. Given information is in the form of tables.

3. The Worst Is Yet To Come: Anonymous Banker Weighs In On The Coming Credit Card Debacle. 

An executivein the banking industry unleashes his disgust in an e-mail to the author. That e-mail is the article.

4. Recession prompts some couples to delay having kids

Its not a joke rather far worse. When 8 out of 10 Americans are worried about FInancial Crisis, history shows us birth rate falls. And, that's dangerous for coming decades for a country's economy.

5. US downturn set to deepen, & debt to mounts - OECD forecasts

Organisation for Economic Cooperation and Development's forecasts and analysis leading to useful insight into present scenario and future action.

Reconsidering: Is it Useful?

Managerial role is so common everywhere in every field that I have come to acknowledge it as a universal value.

Revisions of implemented plans can be life-saving or life-taking in the hours crisis, especially. My aim is to create hope. Therefore, I will not be discussing 'negative'.

The lesson comes from Punjab Government's latest move. I've come to learn from a story in PAGE that Punjab Government has decided to 'abandon those development schemes falling under the Annual Development Programme (ADP) 2008-2009, that are not useful for the public and would prove mere wastage of provincial fund.'

This was decided in a senior level meeting between Chief Secretary of Punjab, its Finance Secretary and other top-level officials. However, they've proved more subtle as we expect them to be.

Government of Punjab has "...already utilised 24 percent of the ADP's total budget of Rs 160m in the first quarter of Fiscal Year 2008-09," because of the finanical crisis in the country. And, guess what, now at this point in time Punjab Government's financial position is quite safe. Like an oasis in the middle of desert!

When Established Superiority Isn't everything

When Established Superiority Isn't everything !!
Posted By Muhammad Umer Toor, 21-Nov-2008.

Always keep in mind what first paragraph of page # 199, 227 (exhibit 8-7) of Management book [1] states, whenever you're in the business. Even when your organization is touching skies or, worst, in a downturn, and if you cease to bring innovation, cease to find new directions and so on and so fourth - this is a worst pitfall. Becoming best is one thing, and trudging along a constant line is not a safe strategy. Because, whenever you find that everything is going smooth, actually something is going wrong there. This happens mainly with those companies whose tasks demand optimum performance; when everything around them is changing without any notices. What I learnt from Stanely Hainsworth, 'former creative genius behind campaigns for Lego, Nike and Starbacks' [2], is that eternal reconstruction is the price of success for any brand. Editor at Entrepreneur magazine calls it as 'Survival of Fittest' [3]!

The basic idea behind finding new directions or cracking innovation, a necessity of established companies and else, is well explained by Hainsworth, and in his own words:

"Many [companies] wait until a crisis hits and then go through the cycle of a
hiring freeze, cost-cutting and layoffs. [Refocus] while you're strong, while have the resources and before you start cutting."[4]

This happens (-unexpected shocks-) mainly becuase of 'market-shifts', customer choices change (like our favorite ice-cream example!), and of course, due to dynamic enviornment, generally. [5]

Doing something ahead of hard times isn't at all a weak idea, only to insane. It's experts' view as well as well-researched thesis. (To quote you one more example). According to a research done [6] on the four common causes of growth stall, two majors reasons given for growth stalls confirm Hainsworth point of view.

One big reason, according to HBR [7], is that 'innovation management breaks'.
Second, because 'company lacks a strong talent bench'. [8]

Once, I asked a senior student of criminal psychology, "What is the remedy for a criminal-minded person?" And, his reply, which I found quite witty, was, "You shouldn't be criminal in the first place." 'That's the best strategy', he whispered to me without even whispering! And, business studies are no exceptions!


-------------------------------------------------------------------------

Notes:

[1] Page 199 (Chapter # 7), Ist paragraph states the successful plans are not likely to work in changed situations. Whereas page 227 (exhibit 8-7) (Chapter # 8) urges the need for creating strategic flexibility, i.e, it consists of: monitoring and measuring results; gaining fresh perspectives and ideas outside organizations; sharing negative information and learning from the mistakes; while making strategic decisions, having multiple alternatives. (From: Management, 9th Ed., by S. P. Robbins& M. Coulter.)

[2] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway.

[3] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway, Pg. # 33.

[4] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway, Pg. # 33.

[5] Quote from Entrepreneur, November 2008, article, INSGHIT "Survival of the Fittest,' by Lindsay Holloway, Pg. # 33.

[6] When Growth Stalls, by Mathhew S. Olson, Derek van Bever, and Seth Verry, HBR (Harvard Business Review), OnPoint, Fall 2008, Article Published Originally March 2008.

[7] Excerpt from HBR (Harvard Business Review), OnPoint, Fall 2008, When Growth Stalls, from Idea in Brief coulmn, Pg. # 33, Article Published Originally March 2008.

[8] It is further explained in the article, (OnPoint, Fall 2008, When Growth Stalls, from Idea in Brief coulmn, Pg. # 33, Article Published Originally March 2008) as:

"The firm has few executives and staff with
strategy-execution capabilities."

-------------------------------------------------------------------------