Monday, March 16, 2009

the pay offs

most of us try and choose professional careers on account of the pay off's from such a profession.
We choose to be Doctors and Engineers and MBA's, because the payoffs that get us employment from such a qualification is better than we would earn with a Basic Arts and Sciences degree.

We hope that our above incomes on account of being a Doctor or an Engineer or an MBA can help us live better lives or for that matter gives us a slightly better leeway in being hedonistic.

A rise in income also raises the sceptre of expenses.
We usually raise our expenses to our incomes.
We usually adjust our lifestyle that suit our incomes.

If we calculate the percentage on an income per month to that of the year as a whole, the percentage of income per month would be equal for the entire period of the year, if our profession qualifies a bonus at the end of the year, such a bonus would raise the percentage for that month, but would still be of little consequence for the entire year.

We would not look as a the bonus as a payoff, such that the bonus affects the percentage yield to a large extent.
In such a case, the bonus would be absorbed in our expenses or lifestyle.

However there are pay-offs that can alter one's life than lifestyle.
The pay-off that is scalable.

As an employee for a firm, the pay-offs are not scalable.
What I mean is an employee can only be employed at a single firm, his emoluments would be derived on his time spent working at the firm. Firms do not pay employee for absence but their presence and since the employee is limited to working for a single firm and thus deriving his income, the limits to scale this income model is limited.

However there are employments, where in the pay-offs are scalable.
As in the case of successful actors - their one film can be watched by multiple people, thus allowing them to earn supernatural payoffs.
A successful restaurant chain - McDonald's, Burger King, etc
Various business enterprise - from MNC to SME.

The key to the payoffs is that they can looked as a fund to free the mind from daily paraphernalia to some quality thinking.

The payoffs thus are not in terms of a constant emolument as we see in salary earned from the profession of an Engineer or Doctor or an MBA (as rise in income will usually be met by a rise in expenses), but payoffs that results in a windfall gain that raises the percentage of income over the whole by a significant extent.

Sunday, March 15, 2009

news

news is as insipid as it can get.
there are a barrage of news channels, also seeming to report the same information - a tad serendipitously.

an analysis of events or study has long been left behind, news as it is today is just presentation of information. the viewer can come to his own conclusion.
at times if there is an analysis the results all seem to cluster around the same framework.

and news gets so repetitious, the same tit-bit of information, presented over and over again, .....what can I say, friend I heard you and saw you the first time....
move on.....

news channels seem to assign reasons of an event to a common set of circumstances.
the dollar appreciated today because of inflation........after about 2 months, the same broadcaster would present the very same reason for the opposite effect.
the dollar depreciated today because of inflation....

where does it leave the common man.....

I guess he is left to derive his own conclusions.

I guess he is also left to find his own information and do his own research.

experts and specialists

our mind usually tends to focus on well defined forms and facts.
What we have been able to define by these forms and ideas is what we grasp, and what we grasp creates the context of our environment.

From generalities we have been able to grasp specifics and these specifics have developed into a specialisation over a period of time. Our environment is composed of such specifics and specialisations.
Doctors, Lawyers, Equity Investors, Bankers, Sociologists, are specialists in their field or profession.

These professions were formed partly by our recognition of such a need in our environment and today we choose these forms and ideas to represent ourselves by way of a profession in the environment.

Each of these professions are composed of definite forms and ideas, each have their uniqueness, ideas and specialisations. And people who take up one of these professions get molded to a form of thinking that is requisite of that profession.

When the well defined ideas and notions inhabit our thinking we usually are unaware or ignorant about the specialisations and uniqueness of other professions. In time, we usually begin to infer that we understand more than we usually do.

We tend to extrapolate our experiences from one profession and make decisions on presumptions about the other.
If a person is a Doctor by profession, she could also be a financial investor in stock or an real estate investor or ascribing to legal codes in trading.
As a Doctor specialised in medicine one does make general decisions about various other specialisations be it stocks, real estate or the law.

How good these financial decisions are vis a vis a Financial Expert or vis a vis a Lawyer would be circumspect, but such kind of decisions are made in our lives.

Though being specialists in one field we do delve into other fields with no specialisation, though our profession is one, we do bank, we do make investments in stocks, we conform to legal codes, though our knowledge is limited in these peripheral fields given the specifics of our profession, we tend to interpret or infer our understanding in these peripheral fields.

Our lives does interplay with these other specialities.
But given our profession or speciality, there is a knowledge gap between what we know of these other specialities and what we think we know of these specialities which introduces an improbability or uncertainty in our functioning and thinking.

The point is not that this is wrong, but the danger lies between what you know and what you think you know for those ideas/forms that do not form our speciality.

In the old days, the specialists were few and far between, most people were concerned with their farms, live stock and house. Our great grand fathers were specialists in cultivating food, providing shelter and defending their own.
The disconnect even if there was any would not lead to a great uncertainty in their farms, live stock and house such that it would impact their existence and lives dearly.
They were in essence generalists and being generalists they risked less.

Today given our environment and the need to be specialists, we risk more albeit unknowingly.

The crux is that if we risk so much being specialists on account of our profession, and this is the realm of what we know, imagine what we risk on account of being unaware or uninformed.

How many of us would have predicted the rise of fuel costs, the fall of banks where we keep half our savings, the fall of insurance firms where we have the other half of our savings, the loss of homes or investments with the sub-prime fall out.....

Specialisations comes at a cost...and a risk....
But then pay offs from specialisations can be great too.....

Saturday, March 14, 2009

the science of discovery

happen to finish reading a book titled 'The Innovators' Dilemma'.
The book is a good read, is replete and descriptive of examples and life cycle curves of the computer hard drive industry - laying emphasis to the fact that the innovations that are the norm or part of the computer industry today, came from smaller firms.
It goes on to explain what favoured the smaller firms compared to the bigger established players at that time.

The book also clearly points out that the established firms were not ignorant or unaware about the technologies that the smaller firms were promoting.

Not that these technologies were not apparent to the bigger firms but the bigger firms having ploughed investments in their scope of business failed to push the novel technologies in their own company to the fore letting other competing smaller firms to push these novel solutions.
The bigger firms were not betting on these nouvelle solution.
Their market research was telling them that such a market for the nouvelle does not exist.

So what actually favoured the rise of these novel technologies and small firms to make it big in the market place.

The smaller firms had a serious lack of distribution networks, clients and a marketing plan, probably even few believers in their product, but the factor that did help some smaller firms to succeed was the event of a black swan.

Such events lie outside the realm of normal expectations and they end up having an extreme impact on the environment.

Today after the occurrence of the event or the sure place that such firms have in the market place, making it all explainable and predictable, these events happened by an element of chance and also the fact that they were in the right place at the right time with some thing right.

But since none of us knew any of these right things before the event these events are pure chance or black swans.

The strategy for the entrepreneur or the innovator is to rely less on top down planing and focus on maximum tinkering with opportunities as they present themselves.