Sunday, April 20, 2008
Life is basically simple. Unnecessarily we complicate it. Even a just-born baby would know that complex derivatives have landed all of us in a deep mess. How to get out of this pit? Again we are looking for a complex solution. Central bankers are revisiting Keynes, Milton Friedman and others. Some governments consult the likes of Alan Greenspan whose words are as incomprehensible as their actions. In the process, we overlook an easy solution at hand.A 359-word thesis from John Coates and Joe Herbert of the University of Cambridge has demolished both fundamental and technical analyses of financial markets. Their answer to the ongoing eco-financial crisis is amazingly uncomplicated. Take the help of doctors. Administer extra dose of testosterone to all dealers in the money market. Market will immediately turn bullish and everyone,including synthetic hormone producers, will live happily thereafter.Here is an extract from the redoubtable New Scientist: "Financial markets driven wild by hormones 19 April 2008 Jason Palmer Magazine issue 2652 THE behaviour of impetuous teenagers is often blamed on their hormones, but could these same chemicals drive the economy? The suggestion is that the movement of money in the markets correlates with traders' levels of testosterone, a hormone linked with aggression, and cortisol, the "stress hormone". John Coates and Joe Herbert of the University ofCambridge monitored hormone swings in the saliva of 17 male traders on a London trading floor over eight days. The swings were compared with the sums a trader made or lost, and with market variations. When the traders made more money, their testosterone levels were higher, the researchers report in Proceedings ofthe National Academy of Sciences (DOI:10.1073/pnas. 0704025105) . When markets were volatile,they had elevated levels of cortisol. But which is the cause and which the effect? Furtheranalysis showed that traders who started their dayswith extra testosterone made ...The complete article is 359 words long."
Saturday, April 05, 2008
IIMs have been using Group Discussion (GD) as a part of selection process for their 2-year post-graduate programmes for more than three decades.There has recently been a rethink on usefulness of GD. IIM, Ahmedabad has done away with GD altogether in its selection process for the 2008-10 programme. IIMA has effected this change without much publicity thereby giving the impression that the institute is perhaps tentative about this change. GD has been maligned by its detractors on various grounds. Some believe that GD favours those who outshout others. Business schools in the US generally do not conduct group discussions. Should Indian business schools be different? Selection process forcivil services like IAS, IFS and IPS does not include any GD. Civil services have produced some of the most outstanding managers. Therefore, what is special about MBA course that necessitates GD as a part of its admission process? Though there is some merit in each of these arguments, we cannot deny that GD is an effective selection tool especially when it is used alongwith, and not in substitution of, other criteria like academic proficiency, CAT score and interview performance. Group Discussion is a useful tool to assess students' clarity of thought, logical analysis,cogency of argument, presentation skills,quick-wittedness, ability to convince others and willingness to listen. All these attributes are supposed to be measured during discussions. These typically are the qualities that distinguish successful managers from others. Though business schools do try to develop and strengthen these skills among students, an entrant who already shows promise in these attributes will benefit much more from the course than those who lack these essential qualities. If entrance examination is a test of one's academic skills, GD is a test of one's attitude. Those who are able to build a consensus opinion through team building and leadership skills stand out in GDs. Rigidity of thought and inability / unwillingness to listen to contrary views result in poor performance in discussions. GD should not be mistaken as a test of one's decibel levels. Pithy sound bites which result from spontaneous thinking and not garrulous expressions of entrenched views carry the day. Thosewho prevent other participants from voicing their opinions are rated low by moderators / monitors of discussion. IIMs and other prestigious business schools encourage students to be active in class participation. This is done only in recognition of the merits of discussion as a tool of learning. Such discussions will enable the teacher to understand how successful he / she has been in imparting knowledge to students. Group Discussions conducted before admissions reveal how much the participants have assimilated from their school and college education. GDs also indicate what the applicants with prior work experience have learnt from their jobs. The US parallel: It is true that American business schools rely only on exam scores and references from known authorities for admissions to MBA courses. Participation by foreign students is much higher inAmerican colleges. Conducting GDs may pose some logistical problems there. Apart from this practical reason, it is worth appreciating that Indian students by nature are more loquacious and therefore ability to discuss is valued much more in the Indian milieu.(Remember Amartya Sen's "Argumentative Indian"?) As an aside, it is said that the challenges faced by a teacher in a typical American business school are twofold: one is to make the Japanese student to talk and the other is to stop an Indian student from talking! Since GD as a part of selection process has stood the test of time in IIMs, the American parallel can at best be only an alibi for discarding GD. Group Discussion is not a part of selection process for India's "Steel Frame". Competitive exams for civil services include written essays which capture the applicants' capacity to express their views cogently. Analysis of pros and cons of an issue is valued much more than expression of polarised views. There are no such essays in Common AdmissionTests conducted by IIMs. Effective articulation of one's views is a sinequa non for a successful manager. Clarity of thought and lucidity of expression enable a manager to negotiate successfully with a team of auditors or union leaders or vendors of materials. Purposeful participation in Board meetings also requires these skills. Therefore, it is not advisable to scrap GD which tests the potential for these skills in an aspiring manager.