Monthly Archives: April 2006

Lexxe

It looks like Google has some competition from the new kid on the block – Lexxe, which claims to be powered by an advanced natural language technology. The USP is that Lexxe can understand natural language queries that begin with ‘what’ ‘who’ where’ etc. Lexxe also organizes results by clusters on the left of the screen. In addition Lexxe functions as a normal key word search engine too. I have been using Lexxe for a while now, and it actually seems smarter than google.

To test its natural language processing abilities, I tried “Why is it cold in winter?” and it actually came up with something about the “northern hemisphere being pointed away from the sun”… not a perfect answer, but certainly more than I expected for an inane question like that!

The more one thinks about Google’s whole page rank concept (quality of a site determined by the number of incoming links and outgoing links), the more one is convinced that it is reaching the end of its leash. Since everyone has figured out how google works, webmasters know all the loopholes in the book to ensure good page ranks. Maybe its better for search engine companies to not reveal how they actually work.

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Prospect Theory [Behavioral Economics]

Although, I had read about this theory some time back, it has suddenly captured my interest again. The Prospect Theory came out of the work of two psychologists – Kahneman and Tversky – to explain why people make decisions that conflict with the Expected Utility Theory. To put it in simpler terms, the theory tries to explain why people behave irrationally in the face of choices.

Read the full post at my management blog.

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Prospect Theory

Although, I had read about this theory some time back, it has suddenly captured my interest again. The Prospect Theory came out of the work of two psychologists – Kahneman and Tversky – to explain why people make decisions that conflict with the Expected Utility Theory. To put it in simpler terms, the theory tries to explain why people behave irrationally in the face of choices.
The expected utility hypothesis is the hypothesis that the utility of an agent facing uncertainty is calculated by considering utility in each possible state and constructing a weighted average. The weights are the agent’s estimate of the probability of each state.

The crux of the prospect theory is this: We have an irrational tendency to be less wil
ling to gamble with profits than with losses. This means selling quickly when we earn profits but not selling if we are running losses. [Tvede 1999]. This can be represented by a value function as shown on the right. As shown, losses hurt more than gains satisfy.

The key difference between the two theories is that the expected utility hypothesis describes how people should behave (prescriptive) when faced with choices, while the prospect theory aims to describe how people actually behave (descriptive).

Simple enough isn’t it? But consider the implications:

  • People hold on to stocks that have taken a beating hoping that they would go up some day
  • People tend to sell off stocks sooner when they are going up – (leading to frequent stock market “corrections” as TV channels put it)
  • People place a higher value on something they own, when compared to the same thing if they didn’t own it. (People prefer certain gains)
  • Your boss is more likely to approve your application for leave if it is in the form of a series of applications for 2 days each every 20 days over a 60 day period as opposed to a stretch of 6 days at a time.
  • A person who owns an apartment will estimate its market rate (for rent) to be higher than what he would pay were he to take it on rent himself.

The prospect theory is all around you. Look out for it.

More about prospect theory.

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The myth of a 9 to 5 job

As people go higher and higher up in an organizational hierarchy, they actually have lesser and lesser to do. In a company that sells a product or service, it is the frontline sales team that actually has a REAL 9 to 5 (or 9 to 9 in certain companies) job. This is because the time they spend on the job directly influences the business they get. Heads of business units and senior managers rarely actually go out to the market place and source business. This means that the time they spend on their jobs has no direct correlation with the success of their organizations. Most of their day is spent on man management, data analysis and decision making.

Read the full post at my management blog.

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The myth of a 9 to 5 job

As people go higher and higher up in an organizational hierarchy, they actually have lesser and lesser to do. In a company that sells a product or service, it is the frontline sales team that actually has a REAL 9 to 5 (or 9 to 9 in certain companies) job. This is because the time they spend on the job directly influences the business they get. Heads of business units and senior managers rarely actually go out to the market place and source business. This means that the time they spend on their jobs has no direct correlation with the success of their organizations. Most of their day is spent on man management, data analysis and decision making.

All of these activities do not consume much time. After all how much people management would you need when the year end bonus of your employee depends on his performance, apart from the threat of losing one’s job. Data analysis is also not a time consuming activity. It is after all the poor MIS guy who has to prepare and present the reports in an easily understandable format. Decision making may be time consuming, but certainly not a full day job!! And then there is this magical word called ‘delegation’. Its no wonder that business heads typically spend their days in ‘review meetings’ and ‘feedback sessions’.

With this being the case, companies must consider changing the ‘official’ working hours as you go higher and higher up, with the CEO being allowed to come and go whenever he pleases. I really fail to see the brouhaha over adhering to 9 to 5 regimens. It works well in a school (where you need to instill discipline, apart from the fact that you cant turn up for a 9 am class at 9:40 am) or in an army (where a herd like adherence to orders is the norm). I can’t see why it should be the same in companies, which I believe are constituted of free thinking and mature adults. Some tech companies seem to have realized this and it is not uncommon to see a few of them adopting a ‘flexible working hours’ scheme for their employees.

I think that the hangover from the manufacturing/ industrial era (when management wanted to be perceived as being equal to the workers) has permeated into white collar jobs too. However, in a white collar scenario, there is no fixed 9 to 6 activity (such as producing N widgets in X time) and hence I do not see why people are expected to sit around all day, or for that matter even turn up on days when all they have lined up is a couple of meetings!! Now that’s what I call, to use a manufacturing term, poor capacity utilization!

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Major irritants on television

Here it is… the list of major irritants on television, based on a scientific study I conducted, which involved swithching channels at a rate faster than a human eye’s blink.
  • All hindi news channels: The only thing good about the Pramod Mahajan attack was that after quite a while it finally gave hindi news channels something real to talk about. Till now they have been very busy with “stories” which involve interviews with MS Dhoni’s childhood hair stylist in Jamshedpur.
  • British Asian Hip-Hop type dudes: I am referring to alien species such as the monkey in the Bombay Rockers duo, the DJs whatevers (including Nikhil Chinappa) with 4 rings on each hand and a woolen cap (that most Indians know rightly as a monkey cap)
  • Hindi News Channels discussing the stock market: My only advice to them is – ‘Leave it to CNBC guys.’
  • CNBC discussing the ‘India Story’ – It looks like CNBC is much more excited about the Indian economy than even the finance minister himself. Watch Ramesh Damania on Oriental and Occidental gush to his interviewees about the Indian economy. He even appears mildly disappointed if one of his guests even mentions China in a positive light.
  • “Original ads” of CNN-IBN and Airtel, both of which try hard to inspire with black and white clips of Mahatma Gandhi, Nelson Mandela etc. Didn’t Apple do this a long while back??
  • After Hours on Zee Cafe where Nina Pillai takes us through the decadence and stupidity of India’s page 3 brigade.

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Team Management vs. Influencing

I have been thinking about this a bit, and have come to the conclusion that managerial roles can be classified into two broad cateogories:
  • Team Management Roles: These are classical management roles where you have ‘n’ people below you. As a manager you achieve your goals through these ‘n’ individuals by appropriately motivating them to achieve their goals, which will cumulatively achieve yours.
  • Influencing Roles: These are roles where you don’t have people reporting to you, but instead your primary objective is to influence people around you to get things done. A typical such role is that of an internal consultant in a company.

I think both roles have their unique challenges, but I believe that the latter is just a little bit more difficult, because people easily understand hierarchies and reporting structures whereas they don’t often want to take instructions from people at their own level. I cannot think of many roles that fall outside the above two categories. In fact, even team management is a form of inflencing and thus the first category may be a subset of the second. Are we to conclude that there is nothing else to management apart from influencing? If that is so, it is rather unfortunate that most b-schools (at least the Indian ones) don’t have many courses on influencing.

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