The Cost of Zero Cost

This is the second blog in which I refer to the book "Predictably Irrational". The author Dan Ariely through this chapter, exposes the irrational behavior of humans when it comes to discount offers and FREE offers.

When was the last time you stopped by when you saw an advertisement that talked about discount sale or a FREE promotional sale? Not too long ago,I am sure. There is something mysterious about the words "FREE" and "DISCOUNT" that causes excitement in us. No wonder every stall in an exhibition has freebies like scratch pads, post-its, pens to attract consumers. I know some people who visit exhibitions only to collect freebies and give bad feedback on companies that may have the best products but not enough freebies in their stalls. After I started flying Kingfisher airlines I have stopped buying pens as I have stock pile of silver and red pens that I been collecting from the free-kit that the airline gives.

The malls and stores in USA have exploited this irrational exuberance by having "SALE" earmarked for every week of the year. Thank GOD we have only 52 weeks in a year !. One of my weekend chores, when I was in USA, was to skim the reams of advertised fliers that come with the newspaper and identify the best deals of the week. In the excitement, that I get a terrific deal, I end up buying things I do not really need - just because it is available at a discount. My wife recently purchased shirts for me that were on sale - Buy 1 Get 1 FREE. She bought a trouser to match the shirt and the shopkeeper showed her another offer - Buy 2 and Get 3 FREE , and she took the bait. I ended up with more clothes than I needed and also payed more for them.

The "Predictably Irrational" book talks about an experiment wherein the author gives Hershey's kisses chocolates to the kids during the Halloween festival. He then offers to exchange one Hershey's kiss chocolate for one big Snicker bar OR getting a small Snickers bar for FREE. There is no prize for guessing what the kid chose - Of course , the FREE small Snicker bar. On rational terms the big Snicker bar was a good deal as it has more chocolate than the small Snicker bar and the Hersheys kisses chocolate, put together. This irrational behavior was not restricted only to the kids, the same experiment done with MIT students yielded a similar result.

So do you think you have a handle on FREE !? OK. Here's a quiz. Suppose I offered you a choice between a free $10 Amazon gift certificate and a $20 gift certificate for seven dollars. Think quickly. Which would you take ? If you jumped for the FREE! certificate then you are like most of the people. A close look would reveal that $20 gift certificate for seven dollars delivers a $13 profit. That's clearly better than getting a $10 certificate free. This is the irrational behavior in action. ( Note : This paragraph was taken verbatim from the book, as I did not want to rewrite and lose the impact that the original paragraph had.)

What is it about FREE ! that's so enticing? Why do we have an irrational urge to jump for a FREE item, even when it's not what we really want? The possible answer to this is that, most transactions have an upside and a downside, but when something is FREE! we forget the downside. Humans are intrinsically afraid of loss, so when we see no visible possible loss when we choose a FREE item, we grab it. But the loss takes invisible forms like the time wasted going after the FREE offer. I was once a victim to this act.

When we visited Orlando for a long weekend to go to Disney world and Universal studios, we were lured into an offer of discount tickets to these amusement part if we attended a presentation by the real estate agent who was selling time-share apartments. Even though I was in USA on a temporary assignment and was not interested in any real estate, the lure of discount coupons made me accept the invitation. We ended up spending almost half-day attending the presentation and visiting the model apartments. Even though we saved few tens of dollars we lost precious hours of entertainment at the Universal studios.

The irrational behavior around the word FREE ! can be used positively to drive social policy. If the registration fees for electric cars are made zero (FREE) then it would make more people buy them. If the critical health checkups are made FREE it may get more people to go through them and early detection of severe illness is good for the individual and the hospital (they will get to treat them). It is during these tough economic times that "FREE" offers from governments can boost the economy. One such example is what the German government did - It offered 2500 Euros to people who junked their old cars to buy new ones. Sales of cars did pick up after this offer.

But as a consumer I am more conscious and avoid going for any shopping that has a big SALE sign written all over its face. I prefer to do internet shopping so that I can buy only what I want ( I do look at the advertisements that pop-up, but they are not as enticing as the SALE I see in the malls/stores). While I control myself, I have to admit that I have little control on the irrational shopping behavior of my wife :-).

- Ram

360-Degree Feedback

As an engineer when I hear of feedback and degrees it reminds me of the control systems, bode plots and the associated eagerness to find if the system is stable or oscillating. Control systems was one of the subjects I used to avoid as they had poles and zeros and they used to scare me. The "360 degree feedback" I am talking about in this blog is one of the fundamental means used by employees to assess themselves. The total angle in a circle is 360 degrees. For getting a complete assessment about oneself one is expected to seek feedback from his/her manager (90 degree guy), his peers ( 0 and 180 degrees) and his reportees (270 degrees). If the feedback is just restricted to these people then the better term for this feedback would be "PLUS" or to make it sound better "POSITIVE". However one would seek feedback from "others" who could be his/her peer/boss in the past, people from the support organisation etc.,. It is when we add these others to the list that the feedback becomes a complete circle and justifies the "360 degrees" title.

This type of feedback is usually sought before the yearly Performance Management or when a person is planning to attend a leadership course (I am enrolled for an Analog Leadership program and I am in the process of seeking 360 feedback. Now you know how I landed up with this topic for this week's blog). The success of these type of feedback lies in the questionnaire used. For quite sometime the simplest (the less appreciated) questionnaire was to ask a set of three questions:

1. What are my strengths ?

2. What are my Weaknesses (in the recent years this term is replaced by "Development Needs")

3. How can I be more impactful.

Such an open-ended question never helps in making a proper assessment. Typical skills (strengths or weaknesses) like Commitment, Quality, Hard Working, Team player etc., is the feedback one gets. It hardly changes from one year to the other. So over a period of time one loses the useful-ness of this format of feedback.

Then there are a few 360 degree feedback tools developed by HR professionals. It has numerous questions and the respondent is expected to rank the feedback-seeker on a scale of 1 to 5. The seriousness of answering these questions drops exponentially as the number of questions increases. Also rarely would one rate a person 5 or 1( 1 being the lowest and 5 being the highest). So the dynamic range reduces to 3 options and in many cases the tendency is to play safe so people could end up rating 3 for many of the questions. To add to these discrepancies it is tough to base-line the scores between different respondents. The criterion I use to rate a person - say 5 for a question would be very different from what others use. The numerical based feedback system has the above discrepancies. The extensive data and the statistics drawn out of them may impress some and they may feel that the feedback mechanism is foolproof. But more often than not, it may not be effective.

The feedback system I was asked to use for the leadership program is called a targetted feedback. When I went through the process I could see some merits of this system over numerical based feedback. In this targetted feedback system, the list of skills which an individual is being rated is decided by the HR professionals depending on the experience level of the individual and the management position. In that sense the skills that matter for a given position is being assessed for the individual. From the list of the skills each respondent is asked to choose three skills that he/she thinks the feedback-seeker is good at and three others skills where he/she needs improvement. For each skill a set of behavior patterns are listed. So the respondent has to choose which of the behaviors of a skill the feedback-seeker exhibits. In the final analysis the feedback-seeker gets to know the skills and the behaviors that majority of the people feel he is good at and where he needs to improve. Unlike numerical feedback people would be more open to receive subjective feedback.

For now I trust this system more than the numerical based system. May be I may write another blog if I find issues with this system (I am yet to get the final feedback summary).

Irrespective of the feedback system used, I believe the best person to assess an individual is one-self (that's why one is at the center of the circle). So while one seeks feedback from others, self introspection should be the top priority. Also direct feedback (not anonymous) that one receives from the boss , peers, reportees or others has a lot more value as he is aware of the context for which the feedback is given.

Seeking feedback is just the beginning in the journey of self-assessment. Taking actions on the received feedback is the most important part of one's self development. It is difficult to make tangible actions for behavioral improvements but there are a few ways to make the actions more tangible. Some of the development needs are addressed by training and some through specific coaching or mentoring. The training part is easier as one can enroll in the available training courses however the coaching/mentoring is a little more difficult as one needs to have access to the right mentor or coach. Having an external coach could be expensive and you will be lucky if the organisation is willing to pick up the bill. One of the easiest and effective solution is to read self-help or management books that is related to the skill that you need to develop and there are a plethora of books available, one can google and find the best book. But the best action is to find a role in the organisation that has scope for exhibiting the developmental skills, this is more easier said than done.

While one can pursue one or more of the above actions, what I have found most effective is the constant reiteration of the development need. This then gets registered in one's sub-conscious mind. When this happens the mind finds ways to experience the needed behavioral changes.

Good luck - be open to feedback, internalise it and sharpen your skills.

Is there discontentment in Generation X ?

Generation X is defined as the generation that were born , and grew up during the later years of, and in the decade following the Cold War. This is the generation whose ages , now, are in the range 30s - 40s. Baby boomers are the ones who were born after second world war and in most cases the parents of the Generation X.

When I look around, I see that the Gen-X have accomplished a lot more professionally than the baby boomers as they have had more opportunities. However, they are more discontent in life than the baby boomers. The discontenment is high in people, who are in profession that is well paying, like the IT folks. I spent time thinking about the reason behind this discontentment. This blog captures my views that I bounced off, a few of my friends. They seem to agree with this perspective, even if some of you may disagree, there is some truth to what I am about to say. So sit back and let my mouth run off :-) .

Baby boomers had to work harder than the Generation X as there were fewer opportunities. Most of the baby boomers used to work for the Government or Public Sector company. The salaries were not high. On an average the baby boomers had more mouths to feed than the Gen-X. They were loyal to their employers. Rat-race was not a term they were used to. Most of them had a single employer for their whole life. They had more or less fixed working times. Most of them were back at home by 6.00 in the evening and would devote more time to their families. They had life beyond work. Some were active participants in their cooperative society, some were regular temple goers, some were regular visitors at their society clubs. There was no cell phone or late evening conference calls to disturb them at home. Goods like TV, fridge, motorcycle, washing machine etc., were a luxury to them. They had to plan finances to buy them. Then there was the biggest goal of all - building one's own house. It took almost 15+ years of service before they could contemplate buying a house. By the time they felt comfortable managing the loan payments for the house, they had to plan to finance for the higher education of their eldest kid. Then the not so further milestone was the marriage of the daughter. Planning for the daughter's marriage was a big milestone and nothing else in life was as critical. Given these financial commitment to be met, the baby boomer had to put up with career dissatisfaction, if any. Their priority in life was very clear, to fulfill the personal commitment even at the expense of their career growth. Some of them had gone to the extent of giving up promotions in their career if it involved relocation to a different city. They felt it would affect the family. They were loyal, not only to their employer but to their family.

With not so great salaries, with more children to feed and educate, with the many financial commitments that were spaced out all through their career life, they could not afford to be discontent with their work/career. At every point of their career they had to plan to meet one or the other financial commitment and hence could not afford to worry about whether they were happy with their career or not. For them work was a means of livelihood and hence they were more tolerant to any inadequacies in their career. With the number of career opportunities being lower they could not risk their job.

So the baby boomers were quite happy and content as their priorities in life was much clearer. The work-life balance was more tilted towards life. They had many personal financial milestones to meet that kept them chugging along in life.

Now coming to the Gen-X. They have more opportunities and in the quest for the perfect career they keep hopping from one job to the other, and their expected job satisfaction eludes them. Even with more opportunites, they are more discontent.

The money comes very easily to Gen-X , they do not need to work very hard for it. The Gen-X
in Information Technology are over paid compared to the other disciplines. What took a decade for their parents to buy luxury goods, they get within the first year of employment. With the salaries increasing year on year, the Gen-X er can afford to buy a home, a lot earlier than the baby-boomers. Many of them have a house, car and other luxuries even before they get married. The financial milestones that were evenly spaced out for the baby-boomers are collapsed into a short window of a decade for the Gen-X. So when Gen-Xer is in his early 30's, he is already financially well accomplished and sees a big vacuum in what he should look forward to for accomplishing. Unlike the baby boomers, the Gen-X er lives in a nuclear family. Their life is centered around work, few good friends and their immediate family - wife and kids. Their involvement in society is limited. Their work-life balance is more tilted towards work, to the extent that even during their vacation, they are mentally at work. Even in their career they progress so fast that a few of them become senior managers by mid 30s. Like the Samsung ad "What's Next" constantly bothers them. This is the source of their discontentment. With 20 odd professional years left, with no strong purpose in life, Gen-X is confused.

By taking a leaf out of baby-boomer's book, Gen-X can find contentment. They can create virtual milestones spaced apart that they have to achieve. They can volunteer to do more for society. They can go beyond their immediate nuclear family and reach out to distant relatives and friends. They can work towards a better work-life balance. They can take risks to try out new career options and eventually see if it can lead them to finding their purpose of life.

An anonymous quote to end this blog ..

"When you can think of yesterday without regret and tomorrow without fear, you are near contentment."

Change

Change is the law of life. And those who look only to the past or present are certain to miss the future - John F Kennedy

The current downturn has brought about very many changes in everybody's life. For those, who have been laid-off, the changes they are going through is enormous. However the people who still have a job are also subjected to many changes. The uncertainty of when the markets would turn-around, job insecurity if the company does not do well in this downturn , all impact them.

With the reduced workforce, the expectation from the existing employees is higher. Employees may be expected to put in longer hours. Organisations are going through many restructuring changes. The workplace is not what it used to be. These restructuring steps may move you to different groups. You may have to report to a new boss. The new boss could be your peer or a person who has less experience.Your peer-group will change. Long term visionary activities take a back seat. You are expected to deliver to the short term goals. The team size is becoming smaller and the clout of being a manager for a big group no longer holds any glamour in the new order. You should get used to leading smaller teams. Many cost containment initiatives will be undertaken by the management. You will be asked to justify every expense you or your team makes. You will be asked to give repeated forecasts that shows cutbacks in the spending, to the point that you may get extremely frustrated. The management may come up with new metrics to measure the progress. You may have to go through the extra overhead of generating these metrics, eventhough some of them may sound ridiculous and waste of time. Reduction in force, in the support organisations, affects the efficiency of your team. The cutbacks in IT infrastructure / hardware would affect the throughput of your team. The decision process could slow down. On the personal front, some of you would have seen your wealth eroding. As you can see, there are many changes that will happen and you, being the centre of all this maelstorm, have to be prepared to face it through.

Change is inevitable and also painful. The butterfly goes through extreme pain when it metamorphoses from caterpillar into a butterfly.The caterpillar begins to feed and grow. The joints between its body segment distend and this activates hormones.The caterpillar huffs and puffs as its skin splits and the worm-like insect steps out of the skin. It begins eating again, non-stop, until the process is repeated, in all, five times.The animal puts on an enormous amount of weight during these 'feasting' sessions. The caterpillar's cells and tissues rearrange themselves to form the adult butterfly. Such is the painful change the caterpillar has to go through to become a butterfly. The changes we go through during these tough times are miniscule compared to what the butterfly goes through.

Change is a huge mindset issue; it is human nature to want transformation without suffering. And though you can resist that change and potentially be swept away by it, you can also choose to cooperate with it, adapt to it, and benefit from it.

There are a few ways you can prepare yourself to lessen the pain caused by change. Many of these changes call for behavioral changes in you.

ACCEPT Change : The first and foremost thing you should do is "NOT" resist the change. Many of these changes are beyond your control. The only control you have is how you "REACT" to these changes. Accept that the new world is different from one you are used to.

ADAPT to Change : You need to adapt to the changes. Develop mental strength to accept and adapt to changes brought about due to restructuring. Understand the new norms and expectation in the changed world. Equip yourself with new skills needed in the new world.

BE POSITIVE : This recession is deeper and longer and it is easy to get distracted and feel demotivated. On the contrary it is during these times that you have to tap into the hidden potential of yours and strive to be "POSITIVE" day in day out. Shy away from the peer circles that are dull and low on energy.

WORK HARDER: These are the times when you should work harder to exceed the goals. You should work harder to make your team and manager successful. Working harder also keeps your mind occupied and will not have room for any negative thoughts that may creep in, because of the recession.

BE PATIENT : You have to be more patient during this time. With economy slowing down, there will be fewer products produced. The pace of work, the decision process could be on the slower side. You need to be patient. Some of the cost containment actions taken by the management may seem riduculous, but you need to be patient and put up with it.You may also have to put up with extra overheads required by the management.

Introspect - Use the change as an opportunity to self introspect. Take stock of your current skills. See how it matters in the new order. You may have to unlearn some of them as they may be irrelevant in the new order. You may also have to pick up new skills so that you can be successful during the upturn.

When you embrace change wholeheartedly as an inevitable part of life, looking for ways to use new changes to make your life richer, easier and more fulfilling, your life will work much better. You will experience change as an opportunity for growth and new experiences.

Less is More

As paradoxical as the title seems there is a profound truth in the statement "Less is More". When the economy is bullish no one talks about "head count issues", they just keep adding resources at will. People come up with innovative justifications why more resources are needed for a project, and there is little resistance from the management. Many support functions sprout, new centre of excellence teams that has no clear business impacts start to grow, many cross-functional teams are setup and so on and so forth.In addition many projects without complete business justification get approved. The success rate of the new products launched is not that great, but the business managers are not held accountable as the overall growth of the company isn't that bad. Over a period of time these additional resources increase the waist-line of the organisation. On top of it, terminating an employee when business is hunky-dory is a tough bullet to bite for most managers. So, on an average across the company, you find more resources than is required for the business.

When the business is bearish or during tough times like the present, the organisation is forced to shed the flab. The first steps are to reduce the contract headcounts-easiest of the decisions, reduce the headcount from support organisation, terminate the bottom 10% performers, question the premise of the centre of excellence teams and cross functional teams. Even after all these actions, if you, as a manager, cannot meet the set goals of head count reduction in your group, you start to look at the product portfolio and see which projects can be cancelled (to start with, you would not be in this position if all the projects approved had concrete business justifications). This action causes you to lose good performers. The head count reduction actions taken across the organisation lowers the morale of employees who still have a job as there is the uncertainity of when the axe is going to fall on them.

When you look back, you realise that the massive layoffs, during these tough times, is the result of the organisations not being resource-prudent to begin with, during the bullish time. Interestingly even with the reduced work force, the number of projects that an organisation does is not reduced. There could be cases of some employees working longer hours but definitely not for all the employees. So how come with less people more work gets done? Is "Less is More" not really a paradox?

To support this point, I will share with you " The case of panicky mice" - An experiment with panicky mice that confirms the reality that less is more and therefore better, not the other way around. The "New Scientist" reported the results of an experiment by a University of Phillipines professor of physics, on how panicked mice escape from an enclosed area. He developed his model based on some mice escaping, from a contained water pool onto a dry platform through doors of various widths and separations.The experimenters varied the width of the exits to allow just one mouse through, and then enlarged the opening to allow two mice, then three and so on. They also varied the distance between the exits. Second, each time one mouse escaped, they introduced another mouse into the pool to ensure the same level of panic among the mice. What did they find? The most efficient escape was when the door size was only large enough for one mouse to squeeze through. As the width of the door was increased, the mice stopped lining up and competed with each other. This actually slowed down the escape rate. This experiment suggests that an excess of resources increases competitiveness while a scarcity promotes co-operativeness.

There are examples even from nature to support this argument. According to experts, Australia has the least fertile soil on earth among all ecosystems. The soil contains about half the level of nitrates and phosphates found in similar and semi-arid regions elsewhere. The absence of glacial action or volcanic activity has meant that Australia's soils have not been replenished with nutrients for a long, long time. Plants in Australia have to work hard to get their nutrition and , having got it, need to protect it from grass and plant eating animals that live in the area. Inspite of these inhospitable conditions, however, there is an incredible diversity of plant life. It is host to some 12000 species of plants, a biodiversity that can rival a rainforest. There is a similar pattern for corals. For more than 2000km along the coastline of Australia, there stretches one of the world's largest collections of coral reef. Lack of physical protection makes these corals protect themselves and their location by producing some of the world's most potent toxins.

Eucalyptus trees in Australia develop large holes in their bases. A lay person would look upon this as a negative development on the assumption that this might weaken the tree base. In reality, the holes provide shelter for possums which leave nutrient-rich droppings as a sort of rent. So what is the explanation for this phenomenon of huge collaboration and cooperation?
In the Australian ecosystems, competition for resources is a rare phenomenon. Species tend to cooperate with each other to process, recycle and retain scarce nutrients. Scarce resources promote cooperation. Because resources are scarce, evolution selects only those species that cooperate to survive and grow. Nature favours those species that consume less, recycle efficiently and collaborate to keep the limited nutrient resources in circulation.

It is commonly believed that offering more choices and options to people adds to their happiness and sense of well-being. The reality is that, beyond a certain level of choice, the psychological impact of increasing choice is actually detrimental. A case that supports this is that, the Gross National Happiness of Bhutan decreased after different television channels were allowed to be broadcasted.

We can learn from these examples, from nature and others, that it is good to create a gap between the ambition and the resources. A feeling of fewer resources is a positive motivation. It stimulates positive action, as well as the collaborative instinct among people. The manager must try to create and maintain this gap between ambition and resources.

Before I sign off this blog I will leave with some of the well known examples of success this gap between ambition and resources has created:

• JFK's vision of putting a man on the moon had this gap.
• JVC developing the home video cassette recorder had this gap.
• US denying India access to supercomputing, helped India develop our own Param supercomputer.

Happy Reading

Ram

p.s The examples in this blog is taken from the book "The Bonsai Manager" by R GopalaKrishnan, again an excellent book to read.

Theory of Relativity

Einstein's Special Theory of Relativity describes the motion of particles moving at close to the speed of light. Eistein's theory of relativity talks about question of whether rest and motion are relative or absolute, and it shows that the objects continue to move in a straight line in space-time. Because most of us have little experience with objects moving at speeds near the speed of light, Einstein's predictions may seem strange.

However I will share a different theory of relativity that everyone of us experience day in and day out. This blog is an excerpt from the chapter on "Truth of Relativity" from the book "Predictably Irrational" by Dan Ariely. I strongly recommend readers to read this great book by Dan Ariely.

Humans rarely choose things in absolute terms. We don't have an internal value meter that tells us how much things are worth. Rather , we focus on the relative advantage of one thing over another, and estimate the value accordingly. Most people don't know what they want unless they see it in context.We dont know what kind of car we want to buy- until we compare cars, test ride them, check what our friend's have. We don't even know what we want to do with our lives - until we find a relative or a friend who is doing just what we think we should be doing. Everything is relative, just like the airplane pilot landing in dark wants the runway lights on either side of the landing stretch.

Dan makes this point with an excellent example. An advertisement for Economist subscription looked like the one given below

1. Internet-only subscription for $59

2. Print-only subscription for $125

3. Print-and-Internet subscription for $125

If you were given these choices, what would you choose? Through a survey on MIT management students it was found that 84% people chose option 3 , 16% chose option 1 and obviously none chose option 2.

When the experiment was repeated with only the following options:

1. Internet-only subscription for $59
2. Print-and-Internet subscription for $125

68% people chose option 1 and 32% option chose option 2.

By adding a decoy option of "print-only" most of them in a predicatbly irrational manner chose Print-and-Internet option over Internet-only option.

So the next time you go to a store for buying TV or Washing machine or other goods beware that there be could be a decoy optional model that would influence you to choose the most expensive option. I would not be surprised, even after reading this blog, you end up choosing the expensive one . No wonder we humans are predictably irrational.

Relativity is (relatively) easy to understand. But there's one aspect of relativity that consistently trips us up. We tend to focus on comparing things that are easily comparable - and avoid comparing things that cannot be compared easily. An example will clarify the above statement:

Suppose you are planning a honeymoon in Europe and your choice is either Rome or Paris. The travel agent gives you three options

1. Rome package which includes airfare, hotel accomodation, sightseeing tours, and a free breakfast every morning.

2. Rome package which includes airfare, hotel accomodation, sightseeing tours, but NO free breakfast every morning.

3.Paris package which includes airfare, hotel accomodation, sightseeing tours, and a free breakfast every morning.

Which option would you choose. The survey shows that most people chose option 1. When the option 2 was not given, it was a difficult to choose between Rome and Paris as the package contents were similar. Even now it is similar, but adding a decoy - Rome without breakfast, makes Rome package more attractive than Paris package. This is what we mean when we say that we tend to focus on comparing things that are easily comparable.

So next time you want you kids or others to choose an option that you wish them to choose add a decoy that is relatively inferior to that option. Going by this predicatbly irrational behavior you may have your way.

The next example of this theory of relativity is an excellent one. Suppose you have two errands to run today. The first one is to buy a new pen, and the second is to buy a suit for work. At an office supply store, you find a nice pen for $25. You are set to buy it, when you remember that the same pen is on sale for $18 at another store 15 minutes away. What would you do? Most people faced with this dilemma say that they would take the trip to save $7.

Now you are on your second task: you're shopping for your suit. You find a luxurious suit for $455 and decide to buy it, but then another customer whispers in your ear that the exact same suit us on sale for $448 at another store, just 15 minutes away. Do you make this second 15-minute trip? In this case, most people say that they would not.

Interestingly in both the above cases you save $7 for 15 minutes of your time. However in one case you take the trip and the other you dont. Is is not an irrational behavior? The problem is that we compare the relative advantage and when the percentage gain is less we do not go the extra mile eventhough the gains in absolute terms is same in both the cases. This behavior of us is exploited very well and we do not mind paying extra $20 to a $500 catering bill for soup entree when we will clip coupons to save 25 cents on a one-dollar can of condensed soup.

The impact of this theory of relativity can be seen from the next example. In 1993 federal securities regulators in America forced companies, for the first time, to reveal details about the pays and perks of their top executives. When this happened the CEO salaries went up three times the salary before executive compensation went public. The reason for this increase is because media started running special stories ranking CEOs by pay. This publicity had CEOs comparing their pay with that of everyone else. In response executives' salaries sky rocketed.

Did you ever look deeper to find why an employee is never happy with his compensation? Its because he is comparing his salary to others around - again an outcome of this relative theory. In the absolute terms his salary may be lot higher to have a better standard of living. But it does not help. As they say "The grass is always greener on the other side of the fence".

So can something be done about the problem of relativity? . The good news is that we can sometimes control the "circles" around us, moving toward smaller circles that boost our relative happiness. If we are thinking about buying the house, we can be selective in choosing the houses that are not above our means. If we are thinking about buying a new car, we can focus on models that we can afford, and so on. By learning to make the circles of comparison smaller, not larger, we can break the cycle of relativity. So next time you want to buy something, downgrade the choice by one notch. You will be lot happier and not get sucked into the vicious circle of wanting more because there is no end to this expanding vicious circle.

I end this blog with an Einstein's quote - " The distinction between the past, present and future is only a stubbornly persistent illusion".

Happy Reading.

Ram

Lessons Learnt from Project Management

There is a famous quote that says "Failing to Plan is Planning to Fail". This statement is so true ! Planning is one part of the project management. The Project Management Institute defines 9 bodies of project management (PMBOK). I am not going to bore you with the theories of PMBOK. Rather I will share my experiences and in the process provide few tips that, I hope, will be useful to you.


I have seen many technical engineers not giving due credit to planning. In their view, no amount of planning guarantees that the schedules will be met. I make a counter-point that "You do NOT need a plan if you know that you can meet all the schedule milestones". What the planning does is to help you track the tasks, so that you can plan contingency actions for any slips in the schedule. Without a proper plan, you will not know when and for what tasks you should take any contingency actions.


A typical R&D project has three degrees of project management freedom - Scope, Resource and Schedule. As part of the project boundary agreement a flexibility matrix is created, which essentially tells which of these degrees of freedom is least critical, medium critical and most-critical. At the beginning of the project a schedule is drafted with a defined set of resources for a defined scope of the project. Rarely does a project go as per plan with zero variance on all these three degrees of freedom. When the project slips then you need to use the flexibility matrix to decide if scope has to be changed, or add more resources or accept the schedule slips. If schedule is least flexible then either scope has to be limited or additional resources should be added to the project. Having a project plan and tracking it will help in taking these contingency actions at the correct time.

Following are the lessons in project management that I learnt :

1. SCOPE is KING - In my experience I have seen that schedule slips not because people do not put in their best, but because they under-estimate the effort. When they estimate the duration of a task it is based on their gut feeling. Scoping the task is crucial to make better estimates of the effort. You have to list the assumptions that you make for coming up with the effort estimates. Listing these assumptions can bring clarity in the scoping of the task and hence results in better estimates. So next time you are asked to estimate the effort, list the assumptions and scope it better. If you are the project leader, ask the team member to list the assumptions used to come up with the estimates. If you find any discrepancy in the scoping, you should point it out. This will help the persons make a better estimate next time. What applies to making a better estimate of the duration of the task also applies for the project. At the beginning of the project quality time should be spent on the scope of the project. Involve all the team members and experienced people to scope the project.

2. Tracking is Key : A good plan is only the start of effective project management. Good project management calls for effective tracking of the project. Most often the tracking of the project at the beginning of the project is not rigorous. Because of this the project starts to slip. If you rigorously track the project from the very beginning, any surprises that can derail the schedule can be found upfront and you have more time to correct it. In order to effectively track the plan, the project plan should have milestones that have reasonable resolution of the task duration, say a week or more. Having a project plan with tasks of 1 day or 2 days will be a nightmare to track.

3. Task-based Scheduling : Do not schedule tasks based on resources. It defeats the whole purpose of effective project management. If a resource is slipping the current task, the person's unavailability to work on the next task will make the project plan show a critical path that is not the true. Always schedule the tasks based on their dependency. This gives the flexibility to re-assign resources on the tasks that are slipping so that the critical path can be alleviated.

4. Murphy's Buffer: When you ask a person to estimate the duration of his tasks, his estimates are usually padded with some buffer. This buffer gives him a feeling of comfort that he can meet his schedules easily. However, in reality Parkinson's law takes over - Work expands so as to fill the time available for its completion, and in the end the schedules may not be met. Eliyahu Goldratt in his book "Critical Chain" talks about student syndrome , students working on their homework at the eleventh hour, due to which the person working on the task does not get serious till he approaches the deadline. There is reasonably a high probability that he may miss the schedule as his start was late. These little buffers at the end of each tasks blow up the project schedule. The approach to counter this syndrome is to ask people to plan their schedule a bit agressively with no buffer for the task. Add the buffer at the project level for the tasks in the critical paths to address any uncertainities. So remember project buffer is for Murphy and not for Parkinson.

5 Early Contingency actions : If you track the project rigorously from the start then you get an early warning on any slips in the schedule. I have seen project leads reluctant to act early on any contingency actions. I have also heard them complain that getting a extra resource from other team would not help as they would have to spend time ramping this new resource and it would not be worth it. Get over this reluctance !!. Investing in the new resource early in the project will help a long way when the project gets under more schedule pressure towards the end. Remember the last 10% of the task takes 90% of time. So having extra resources never hurts. Again when you involve the resource from a different group early, it gives him time to do a complete job. His sense of belongingness to the task increases. So you can potentially get to use his services even beyond the official time-line of help. Remember never say NO to the extra resource you can get, to pull your project back on schedule.

6 Continuous Communication : Keep communicating with all the team members of the project continuously. Show them the connect between the tasks they do and how it relates to the project goals and to the organisational priorities. Over communication never hurts.

These are not the end of the lessons - with every project I learn new lessons. If I keep up this momentum of blogging perhaps in the future I would come up with next revision. Till then I hope these few lessons I learnt doing project management was useful to you. Happy reading.



- Ram