Monday, May 31, 2010

[Book] a fine line

a fine line
how design strategies are shaping the future of business
by hartmut esslinger.

This book was distributed to all employees of my company when the (newly appointed) VP in-charge of design visited Indian R&D Center .This is single major reason why I started reading this book apart from fact that this book itself was beautifully designed :).

True to my expectations it proved to be a page turner during the initial chapters . Hartmut Esslinger seems to be design guru of recent times. Initially he speaks of his childhood experience in West Germany and incidents following second world war.It continues to be a biography where he explains his startup design studio frog and his encounters with some industry leaders such as Apple , Sony etc. He is associated with the "snow white design style" of Apple Mac , Sony's flat monitor , Windows XP's Logo , louis vuitton , Lufthansa etc.Pretty interesting list. He warns initially that this is not a text book for design. Basically he explains the importance of design with examples from his own history which help us to articulate with the facts he trying to explain. His standpoint is that "design" being the first in the product life cycle ,any mistakes made here is hard to correct ,if at all there is a chance to correct. Hence designers should be given complete freedom , free from inter departmental politics etc ..

So far so good . During the last couple of chapters he morphs into a crusader for employees in developed nations. He starts to blame outsourcing to that 3rd world countries ( China ,India , Taiwan etc ) as the main reason for the growing problems for the world leaders such as USA , Germany , or for that matter to the entire world itself . He sounds more of a paranoid senator . He reiterates his view , coming down heavily on outsourcing stating it as a reason for a number of problems facing mankind such as "not so great product development in recent times" , "unemployment in US" , "environmental pollution" ,"brain drain from western countries" and what not. Oh God the list is so lengthy that at times we feel lucky he didn't blame China and India for few other global problems left out such Gaza strip deadlocks , Taliban etc. Who knows in his next edition he might propose theories to claim that too are caused by outsourcing .

Inspite of his sarcastic view on outsourcing , he terms Apple contract product manufacturing in China as "smart sourcing" where the contractors are involved very early in product life cycle so as to have collaborative development. God only knows what level of collaboration will Steve Jobs will allow Apple to have with his contractors. Later he advocates a strategy called local sourcing where all stages of the of product's life cycle should be performed in a single place so as to articulate the product with the culture of the place. Hope he will not come back to the 3rd world countries to market his product. Epitome of his philosophy is his discovery of desktop production where every one can create what they want in their home . Its good for engineering students to learn about a machinery ,but how the hell will it scale up .

Clearly the book looses its intention towards the end , might be the author is emotionally affected by the recent financial crisis in US.

Thursday, May 27, 2010

Irregular wealth distribution in India - derived from 3G Auction price

Its a well known fact that job creation ( and hence wealth creation ) in our country is concentrated to few of our metros . But we dont have data which can quantify this deviation between the cities and rest of India and among the states . Statistics such as income tax collected at different cities/states or average salary in various areas are not in public domain. Intention of this writeup is to quantity this deviation. Prices paid for 3G spectrum in various states /circles are taken into consideration.

Reason to select 3G auction prices :
Telecom industry in India has highly penetrated the length and breadth of the country than any other service industry. 50+ crore (and still counting) telephone connections is evidence for this. This auction is a bottom up approach,where the service providers bid for spectrum in each state/region based on the revenue earning opportunity envisaged in those regions . Most of them have services up and running in 2G technology . Hence their bid for 3G should have been based on current earnings in these regions and also supported by to scientific studies on probable revenue earning opportunities by their market analysis teams.

Also we can assume that for any individual amount spent on phone bills is proportional to his disposable income which inturn depends on this total earnings. Aggregating it on a region/state basis we can conclude that bid by any provider should be proportional to the total earnings for that region.

Final bid for various circles[1] and the approximate current population of this region are taken into consideration. Official 2001 census result for various states is taken a primary data and extrapolated on basis of increase in total population of the country to arrive at the current population count of various regions.Finally price paid per citizen ie) Total 3G license fee for region / Total population in that region is calculated and compared across regions.Check the attached excel sheet for more details[2]

Region 3G Auction price per citizen
Mumbai 6398

Result are showcasing the deviation more clearly. Metros ( Delhi,Mumbai ) are the clear winners where price paid is around Rs6000 per individual. . Next comes the bunch of states predominantly from the south ( TamilNadu , Andhra , Karnataka , Gujarat ) where the price is around 480-800 per individual . Last bunch has the improvised states of Bihar ,UP,MP,Orissa,West Bengal , North east , Jammu & Kashmir where the price ranges from Rs150 to mere 45 per individual. Weighted average of this region comes to around Rs 100 .
Difference in price between the this region and metros is quite huge. Delhi's price is 60 times more than this entire region . Similarly prices in Tamilnadu ,Karnataka are 10 times than this backward belt. This translates into the fact that disposable income and hence the average income in metros such as Delhi, Mumbai is 60 times that of these improvised states which has around 50% of the entire population .Now it should be clear why naxalites thrive in this belt

Though most of the economic indicators for India such as GDP growth numbers , growth in average income etc increases at fascinating speeds , this growth is experianced by a smaller ( or rather minute) section of entire population whereas the vast majority still suffers from abject poverty.

[2] Excel Sheet