INSEAD Blog by Zanat0s the INSEAD(er) @ Tokyo ! The Biggest among INSEAD MBA blogs. Insead is over, blogging not.

Blocked at Work

Original Posted @ www.inseadblogger.com

Today access to all websites from my office in the country which hosts the olympics(i cannot write the name so they won't find it), even my blog(my famous blog). But maybe they haven't heard of anonymous proxies. Life is about improvising. My chinese friends taught me to jump around hoops and evade traps. I am not an IT geek but i know how to bypass some issues.

This is a post from the DARK SIDE. If you want to visit some sites that are beyond your reach at some level i propose you try the proxy service. Go online and search for places which mask your ip. I won't post the address but they are many of them out there.

THe blockers will never prevail over the bloggers.

Prepare for the Job Hunt

Back from China,

Original at http://www.inseadblogger.com

Today should have been the day that I write about my 6 months in Japan, recollections, frustrations, happy times. No I won’t do that… On the contrary today will be focused on career advancement.

Start with your resume. Your resume must contain your personality. Most people/recruiters see thousands of CVs per day. Yours have to be able to portray who you are and not be another run of the mill. Do not ignore the guidelines but at the same time do not follow a template 100%! Do not go after job. Make contacts and create conversations that lead to job offers, funding, or consulting engagements. Remember the god job finds you, not the other way around.

Talk to your friends, they know and they know where you will be a better fit! Talk to people you trust. Are you online? You have a blog? Can you be googled? If you do not exist online you neither exist offline. At the same time do not over do it. Your network is like a fast car. It can run fast but it will require a lot of petrol and then it cannot be refilled

Most importantly though; A Big career move depends hugely on careful, methodical research, from having the ubiquitous drink(coffee) with related experts, to online research of deals and people moves, to finding industry wide events. After all these have been done learn how to sell; the most important product: yourself. Have your story ready for everybody to hear. Do not overdo it though.

Select the person you want to assimilate, the person you want to look like. Last but not least be open(not as much as a book)

Zani out!

Businessweek proves Zanat0s right about INSEAD & other EUropean Bschools

There was an article on Business week called the Rise of the European Business school. Zanat0s has written non stop regarding the rise of Europe generally ( Euro, most prudent banks, more diversity, more culture, more integration and above all better situated to create competent business leaders). Lets not forget that Europeans were the one who pioneered the art of globalization.

The Rise of the European B-School Shorter, cheaper programs and demand for international experience are two reasons business schools across Europe are flourishing.

I will start by saying that the “cheap” notion is wrong. Cheap sounds bad and at the current time it is an oxymoron. The way the Dollar is going it seems a degree at top European business school will require a big investment per year. Yet on the other hand it requires less time (so shorter time spent at school and less time out of a salary). International experience is something one cannot get in the USA no matter how much the USA based business school try to portray themselves International. I am sorry I won’t buy this argument. Try to see the value in studying in the states. The only reason is to get a job in the states afterwards. Outside the states better study in Europe(better spillover effects). I need to point to the Chinese who still are loyal to the USA educational system. This may be a bit rough but it is based on feedback I have form Chinese colleagues, friends and classmates. Chinese parents want for the kid to get educated in the States no matter the kind of university. They prefer to send their Child ot Tier-4 university(eg State University of Montclair) instead of a good European one. So when the neighbors ask where the child is studying the parents can say with pride in their voice that they have sent their offspring to the states. Makes no sense does it? It is reality though.

Applications from the U.S. to INSEAD, an elite French business school with campuses in Fontainebleau and Singapore, grew 20% in the past year and the school's 2008 enrollment of Americans grew nearly 24% since 2007, to 73 students.

Of course it is natural for Insead(and other European ones) to have more Americans. They have woken up to the fact that the educational system in the states may be the best one for “hard” skills but lags a lot regarding “soft” ones which are essential for success in the world today. It is Always nice to see that your MBA is proving to be a good investment.

INSEAD's dean, Frank Brown, says ever more young people are recognizing the value of an MBA but don't want to spend two years earning one—the length of most U.S. programs. Others credit the U.S. recession.

Credit the recession? Then why do an MBA in a continent whose currency makes your savings appear small and will reduce your purchasing power? Or Even worse in a continent most publications deem as failure in the making?  Or even a place which most USA based companies shun?

Furthermore, MBA students are increasingly looking to pursue social justice through business, and many European schools have responded with a wealth of new courses on corporate social responsibility, social entrepreneurship, and doing business in developing countries. In 2004, Instituto de Empresa Business School in Madrid, another elite institution, founded the Center for Eco-Intelligent Management to teach sustainable business practices. That same year Oxford opened the Skoll Center for Social Entrepreneurship, which provides five MBA scholarships a year.

Once again Zanat0s has proved right when he 12 months ago was stating in this blog that MBA holders should be something more than a number cruncher. MBAs should be leaders and able to adapt to changing situations. A person who can master excel but not human relationships will end up a clerk(even hedge funds people need interpersonal skills). The new trend? Empathy!

The international mix of students at European schools also attracts applicants. Just 14% of 188 full-time MBA students at HEC-Paris, one of France's elite grandes écoles, are French, and just 5% of 215 full-time MBA students at Oxford hail from Great Britain—figures typical of top European programs. By contrast, 63% of the 900-strong MBA class at Harvard Business School and 55% of Wharton's 800 MBA students are American.

I rest my case…. One should never use “international” and “American MBA” in the same sentence. I am not talking here about the American being the highest represented nationality at the MBA program but consisting of more than 50% of the program’s intake. How can this be called a diversified class? Most will share the same experiences and ideals Will be republicans or Democrats, will drive the same car and have the same culture. You want this kind of experience? Go for it. But you have been warned.

About a third of MBA students at INSEAD study at the school's campus in Singapore, where ESSEC, anothergrande école, also has a campus.

That includes me too. But I did not know that ESSEC has a campus in Singapore. Going online to search and post my findings……………….. OK ESSEC has a campus, created after 6 years INSEAD started its own campus and the ASIAN centre(officially called) has nothing to do with the MBA program. I have once more to state that INSEAD Singapore is autonomous 100% with the same teachers. The only difference is the setting and the timezone. No other B-school has achieved that.

While the repercussions for Europe's MBA programs remain to be seen, the current outlook is bright: Applications are up, admissions are increasingly selective, and ever more companies are demanding multilingual recruits with global polish. With the number of programs specializing in disciplines such as entrepreneurship, finance, and corporate social responsibility on the rise, Europe remains a compelling locale for MBA education. Harvard Business School, beware!

Haha Aren’t I pro-european?

Subjective or Objective

The fish and the bowl: Human nature has it flaws. Humans cannot be nor perfect nor omnipotent. One cannot be aware of everything. Life is too complicated and with parallel situations maturing. According to psychological studies, humans have a tendency to prefer knowns over unknowns. We try to see only what we are informed of. Choices are determined by what lies in our subconscious minds.

Comparisons are grounded on the basis of one’s information and background. Comparisons are there limited and relative, Limited because nobody can be virtually cognizant about all options and alternatives. Imagine whether one can be possibly compare or at least know all the perfumes available. Therefore comparisons become relative and subjective. A person rates and bases his comparisons on the available data-set he has formed. Data-sets differ between different individuals. Let’s see Person X and Person Y. If they are asked to grade/rate a random product V they will have to give an objective rating. The individuals are going to rate the products by comparing them to the other alternatives. Person X is evaluating the product V by contrasting it to the following dataset ( A, B, C, D ,E & F). Person Y will use a different measure (A, D, E, H, K, L, & T).

As one may perceive comparisons cannot be relied upon. There can never be objective or absolute comparisons, only defective, subjective and relative. Two other shortcomings have to do with how people rate and what determines their ratings. Modern statistics have come up with tools and methods which are supposed to blur the boundaries and erase or at least minimize any personal prejudices. The above Person X may rate product V with a grade 8 (on a 10 grade scale 1-10) while also Person Y may use the same rating. Does this deduce that they hold the same opinion about the product? No! Person X may consider grade 8 a very high rating since he is a “strict” judge. On the other hand Person Y may be very munificent with grades and therefore he may hold a lower opinion about the product than one may presume. Now, research methods can evaluate how a person rates by balancing his/hers rating history.

The second shortcoming is what determines the rating process and outcome. Imagine 2 guys are discussing about a random woman. They may have the same opinion about her but for different reasons. The first one likes her smile more and without being aware of this fact give a high rating. The second guy is fond of her ears. While both of them may concur that they find her attractive, both of them see a different version of beauty. Perhaps this illustration may help the readers. Think of the woman or anything you want as the center of a circle. Everybody then can take a place on the circumference and look at the center. This is what people call a different angle, a different viewpoint. A person can only be aware of what he sees and perceives. He is not aware of the viewpoint others are occupying.

Even a simple concept where most people agree on, colors may be totally subjective. Can you define color red? You may think colors can be defined but in reality that is neither practical nor feasible. Users familiar with computers and image processing programs know that colors are categorized by their number. There is no RED color. There are different shades which get “named after a series of numbers and letters. A color can be something like #FFF04C. Red means nothing. Computers have helped the human race to start obtaining standards which can be accepted by anybody. How many times have you used the words, fast, tall, short, fat, heavy. There are no standards uses for these words. What about the most common example. “I will call you later”. What does later mean? Tomorrow? In 5 minutes? In a day?

Our time for today is near its end. Next time think before you make a judgment. Does the other person or the one it is intended for share the same mental upbringing like you? Do the words you use be interpreted like you intend to? Do not hurt or insult other when it is not your intention to do so. Learn how to make your point across various audiences. Value systems will become more clear when you align your senses with the outer world.

Agency THeory 2, The Theory explained in my own Words!

2 days ago I promised to explain and analyze the agency theory. Unfortunately I didn’t have the time or the energy to delve into finer details. A promise is a promise and on top of that there is nothing better than transferring knowledge to friends and acquaintances. Agency theory is being criticized a lot by shareholders and managers. Why is that?

To examine and objectively discuss about a theoretical concept, like the agency theory, one has to start from the root. Remember the world is not Black & White, but contains a lot of Gray shades. For everyone who supports or acknowledges a theory, there is a counterpart who disagrees with the theory’s principles. Having said that I will try to give both sides of the story in the following paragraphs.

The official definition is: Agency theory deals with the cooperative relationship which develops when one individual in an economic exchange (the principal) grants authority to another (the agent) to act on his or her behalf, and the welfare of the principal becomes affected by the decisions of the agent (Arrow, 1985; Barney & Ouchi, 1986; Jensen & Meckling, 1976). Start the dissection now! Who is an agent? Who is the principal? Some real life examples will make these distinctions clear. Everyone is accustomed with the real estate agent, whom you contract (pay a commission) to either find you a place to buy/rent or to sell (depending on your needs). In this instant the Principal is the Buyer/Seller and the real estate agent, the agent.

Back to definitions again. The concern of this theory is that the welfare of the principal may not be maximized because the principal and the agent tend to have different goals as well as differing predispositions toward risk (Wright, Ferris, Sarin & Awasthi, 1996). I will examine whether this stands true for the real estate market. Do agents normally have different goals? Real life and experience says so. In this case experience stands to confirm a theory’s underlying position.

A seller/buyer want to maximize his returns. A seller wants to find the best place for the lowest price. Let me rephrase a seller desires to find the apartment/house which maximizes the utility to him for the lowest price. On the other hand a buyer wants just to rent/sell to highest bidder. Where does the agent come in? An agent is like a middleman. He brings the two parties together. An agent gets awarded on a commission basis. His incentives are to close a deal ASAP. The agents try to seal on first come first serve basis. The best deals(high price or low price, depending on your view) take time to be found, one has to search. For the agent the extra effort is just not worth it. The incremental commission is always lower than a new commission on a fresh deal. The agent just needs to “persuade” the parties that every deal is a “sweet deal’.

You can apply this theory to other instances. A company hires an agent/scout to search for new products. Normally the company issues specific specks about quality and price and then awaits the quotes from the agent. The agent again has different incentives from the company. Finding products sooner is what he is trying to do. The information asymmetry plays to the agents’ advantage. Information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance in power in transactions which can sometimes cause the transactions to go awry. The agent knows, or has the ability to know, the average price for some goods. The principals cannot. Therefore an agent most probably will try to find a supplier ASAP. The company has no way to discern whether the contract is good for them or not due to the lack of available information.

Need any more examples? Other instance can include: used car salesmen, sports agents (think of Jerry McGuire), wedding planners, travel agents, matchmakers (wouldn’t you think of that I guess) and many others(Send me examples if you may).

Agency theory has been criticized for being too narrow because this theory emphasizes the contract between a principal and an agent, and the ways in which the contract can be made more efficient from the perspective of the principal (Eisenhardt, 1989; Perrow, 1986). I will add another criticism. By browsing the web you can find various types of mathematics in relation to Agency costs and various utilities formulas. In my opinion mathematics just over complicate the theory and make it less approachable by non economics academics. Moreover I believe although mathematics may lead to better predictions, they are just not applicable in corporations and real life. They may be used to examine results afterwards not in advance. To keep this article simple, formulas won’t be used( for the truly obsessed Homo economicus read this paper http://www.econ.jhu.edu/people/Karni/seuwmhr.pdf).

Corporations are owned by shareholders. Shareholders(principals) have invested their money(equity) in the company. They hire/use managers(agents) to run the company. The concern of this theory is that the welfare of the principal may not be maximized because the principal and the agent tend to have different goals as well as differing predispositions toward risk (Wright, Ferris, Sarin & Awasthi, 1996). Specifically, principals are considered risk neutral in their preferences for individual firm actions since principals can diversify their shareholdings across multiple firms (Wiseman & Gomez-Mejia, 1998). In contrast, agents are assumed to be risk averse since agent employment security and income are inextricably tied to a single firm (Donaldson, 1961; Williamson, 1963). In essence, agents are assumed to be risk averse in decisions regard ing the firm in order to lower risk to personal wealth. Thus, the focus of agency theory is on a contract that minimizes costs associated with an agency relationship (read full article at http://www.accessmylibrary.com/coms2/summary_0286-27250890_ITM).

Here is a look at how different parties have diverging interests. Management : Management, mostly the CEO, has their own objectives to accomplish. Empire-building, inflated earning( for higher bonuses), lavish expenses ( Corporate jets), cronyism, risk-averse strategies. Management’s role is to maximize the shareholders’ wealth. Sometimes though this is by far not true. Management either increases their own compensation or just scatters away shareholders’ money.

Bondholders typically value a risk averse strategy since that will increase the chances of getting their investment back. Stockholders on the other hand are willing to take on very risky projects. If the risky projects succeed they will get all of the profits themselves, whereas if the projects fail the risk is shared with the bondholder.

Bondholders know this of course, so they will have costly and large ex-ante contracts in place prohibiting the management from taking on very risky projects should they arise, or they will simply raise the interest rate which in turn increases the cost of capital for the company.

The solution to the Agency theory was supposed to be: Incentives and Stock-options. Shareholders had to find a way to “align” incentives. Until the stock and options-scandals broke out they were considered to be the best ways out of this complex situation. The extreme focus on incentives can be counter-productive. Empirical evidence is plentiful just look at the corporate scandals of 2002. One school of thought supports that some managers should be able to invest in the company, without awarding them stock options. There are formulas that mix performance based bonuses with a normal salary. Critics accuse that these bonuses have 2 adverse consequences. Firstly they set a ceiling(or increase the need to cheat) and secondly do not take into consideration the long term benefit of the company. Like it has been noted management becomes more risk averse.

Basically one needs to know how to align incentives. The best medicine for know is pay for performance. Like everything else in this world, there is no panacea. No drug without side effects. This is the essence of brutal facts.

Lazy or incompetent?

OK! Normally I shouldn’t post this but here it goes. I need some things to be done so I made a list where I wrote who should do what, how and by when. A pretty simple list it was. One of the requirements in the list entailed to have some files copied from the hard drive onto a USB stick.
I know, I know most of you will laugh at the “complexity” of this action. Doing Drag and Drop actions require a lot of intellectual capacity. A Phd may even turn out to be handy. I was talking with the person whom I handed the list today and he informed me that the person in question had “trouble” to solve the issue.
I do not want to believe that someone who is using a pc frequently cannot accomplish this mundane task. I rather believe he is too bored to bother himself. I can go on without acquiring this information. On the other hand he will have a difficult life in the future without these skillsets.
But honestly I would like to receive this data to facilitate my work. Oh I got also scolded for not writing explicitly what I want in one line. I went through the list and asked if he was responsible for that according to my directions. He said no but insisted I should give more information. I replied to him letting him know that the one to whom the letter was addressed will know what to do and of course it makes no sense to him since it is not his area of expertise.
Anyway it is getting late and I have to wake up early tomorrow. I am resolved to the fact that person A is either extremely incapable of doing what he is told or that his laziness knows no boundaries!