Why would a specialist want to be a generalist?

Why would a specialist want to be a generalist?

After the moderators hauled the last load of verifications in the third week of December, I finally got a chance to look at the class profile of IIMA PGPX 8 batch for 2013-14. Although privacy issues do not permit discussing class profile at this stage, this article would still be of interest to prospective students of PGPX at IIMA and other one year general management programs.

My first glance at the class profile generated a silent question in my mind – Why would a specialist want to be a generalist? The class profile emitted the themes of diversity, broad knowledge base, exposure to multiple disciplines and specializations with a lot of breadth. But after going through individual profiles, I was on tenterhooks to dissect the generalist v/s specialist conundrum.

Thankfully a knowledge transfer session organized by the outgoing batch was around the corner and I got a chance to volley my conundrum in the ‘green room’. To get a broader perspective on the subject I tried to speak to a diversified sample of X7ers on what value addition they feel a general management program like PGPX provides to people of specialist domains. There was one particular response which stood out and left a lasting impression on my mind.

This wonky X7er served an ace and cleared the air by citing the proverb “To a man with only a hammer, every problem looks pretty much like a nail”. He went on to explain that the man who has various tools will limit bad cognitive effects from the man with a hammer tendency. He made sense but I had a follow up question – How can a ‘specialist’ overcome the hammer tendency and achieve worldly wisdom through this program (read PGPX)?

A letter perfect response to my follow up left me awestruck. The ‘wonk’ stated the matter concisely – for a specialist attaining a worldly wisdom is an ongoing process of, first, acquiring significant concepts – the models – from many areas of knowledge and second learning to recognize patters of similarity among them. The first is a matter of educating yourself and the second is a matter of learning to think and see things differently.  He was candid in acknowledging that acquiring knowledge of many disciplines may seem a daunting task. But he was equally straightforward in stating that fortunately, you don’t have to become an expert in every field. You merely have to learn the fundamentals principles – the big ideas and learn them so well that they are with you always.

So as I take the first step on a pathway towards a goal of flexible thinking and broadening my knowledge base derived from exposure to multiple disciplines, I look forward to understanding the truly big ideas of each discipline and then connecting them back to my specialist domain. I hope to be back on this post after a year to testify on this conundrum from my own personal experience.

Reactions to the Union Budget (2013-14) - Travel and Tourism Industry Perspective

 

Reactions to the Union Budget (2013-14) - Travel and Tourism Industry Perspective 

The finance minister has presented the union budget amidst a difficult macroeconomic situation. Current account deficit is at a record high and fiscal deficit is swelling. The economy is in a ‘stagflation’ kind of a situation in which inflation is rising and GDP growth is falling. The domestic situation is precipitated by weak economic data from global economies. Under these constraints the Finance Minister has done a good job of presenting a budget that addresses the larger issues and looks at the bigger picture. The budget will essentially have a J Curve effect on the economy. Things will turn worse in short term before stabilizing and improving in the medium and long term. It’s after a long time that we have seen a firm commitment from the government to address the long term issues over the short term quick fixes.

The budget has done two important things. Firstly it has reassured the markets that the government is ready to step out of its comfort zone to follow the fiscal prudence path necessitated by the burgeoning current and fiscal deficits. Secondly it has communicated to global investors that India stands committed to carry out reforms to correct macroeconomic imbalances and aim for a sustainable growth path.

The effect of the budget on travel and tourism can be dissected from two different angles – the short term effect and the medium to long term effect. In the short term the budget is negative for the tourism sector and may lead to a demand pullback. Across the board increase in taxes on luxury products will hurt demand for luxury travel in the short term as the additional expenditure on luxury products will reduce disposable income of high net worth individuals for discretionary purchases such as travel. Although there is no change in slabs for personal income tax and there is only a marginal relief in the form of tax credit, the budget through its far reaching tentacles of fiscal consolidation will hurt demand for travel from low and middle income group segment. Food inflation is still high and in spite of efforts to control inflation, the rise in fuel prices and reduction in subsidies will have a negative impact on the discretionary spend of low and middle income group. The demand from industry / businesses will also remain weak in the short term as the interest rates remain very high and there is very little incentive for the industry to increase capital formation/ spending. The investment deduction allowance will encourage only the small and medium enterprises to make investments.

In the medium and long term the fiscal consolidation measures taken by the government will yield some positive results and economy may start to make a turnaround. There will be a three dimensional positive impact on the economy in the medium to long term. Fiscal and current account deficits will come down, Indian Rupee will appreciate relative to the US Dollar and inflation will taper off. The finance minister has taken stern measures to keep fiscal deficit under check and reduce current account deficit by putting measures in place to reduce gold import and reduce the fuel subsidy bill with a monthly increase in fuel prices. All these measures will give enough room and the confidence to the reserve bank to cut interest rates and infuse liquidity in the system. The reduced fiscal and current account deficit will also ensure appreciation of Indian Rupee relative to Dollar which will in turn reduce the fuel bill even further. The inflation is also likely to taper off and this will increase spending by individuals. This three dimensional impact in the medium to long term will propel demand both from individuals and businesses. The strengthening of macroeconomic fundamentals will have a multiplier effect on demand for travel and tourism.

Having said that the budgets have traditionally been disappointing for the travel and tourism sector as the subsequent governments have failed to recognize and encourage the potential of this industry. In fact there is a long pending demand of the industry for a ‘priority industry sector status’ for travel and tourism which yet again has failed to find favors. The finance minister has talked about rationalization of direct taxes and efforts to fast track the GST rollout, but he has failed to address the long pending demand of easing out service tax complexity and ambiguity in the travel and tourism industry.  Among other pending issues not addressed in the budget are the rationalization and reduction of taxes on ATF, tax concessions to tourism industry for infrastructure spending, fast track and single window clearing system for tourism and hospitality projects etc.

This budget reminds me of a 4x100 relay race in athletics. The finance minister has run a good first lap and handed over the baton to the reserve bank. It’s for other stakeholders including the reserve bank to compliment the good first lap of the finance minister by putting in their best efforts and ensure a podium finish.

How bad governance and an elephant footed Judiciary is derailing the Indian economy...

How bad governance and an elephant footed Judiciary is derailing the Indian economy...

By all estimates India is poised to be the third biggest economy by 2050 sharing space with China and America. It is all set for a very high growth trajectory eclipsing China’s high growth rates anytime between 2015-2020. The basis of these estimates remains that India’s political landscape remains stable and policy framework remains strong. But as we are all set to board a high speed growth train, suddenly we have acquired travelling sickness (in terms of poor governance, policy logjam and slow justice). We are not in the best frame of mind to board the train. Rather the train is apprehensive to board us, lest we spoil their spick and span train with our sickness. It is thus giving us time to sort out our sickness before we are afforded an opportunity aboard the fastest economic growth train. This is one train we cannot afford to miss and this is one train we want to board with our best foot forward.

India is an emerging economy with a young population and strong economic fundamentals. Free judiciary (though the speed of justice remains a drag), democratically elected government, independent central bank and developed financial markets are the pillars of our economic growth and red tape, corruption and poor infrastructure remains the irritants in the growth process.

The question that we are answering here is how and why bad governance and elephant footed judiciary jeopardizes the good work and threatens to derail the economic growth engine?

India remains heavily dependent of foreign investment in order to sustain and increase our GDP growth rate. Currently we import more than we export, thus the current account deficit and we pay for our imports (which are more than our exports) by borrowing from abroad (foreign investment). FDI in any form is welcome as that is helping the country generate growth and thus this form of foreign investment is pro growth. Foreign investors when investing in a country look for the following parameters:

1.     High growth rates – India is currently in the high growth phase and thus investment by foreign investors in India is giving them high return on their investments.

2.       Current account deficit

3.       Fiscal and monetary policy

4.       Fiscal deficit

5.       GDP/Debt

6.       Liquidity

7.       Political Risk Premium

8.       Stability of currency

I ‘ll try and brief on parameters in the next blog.