Panama Paper leak, and Indians

What does the Panama Paper Leak mean to Indians?

TLDR - Many of the super-rich Indians, first generation or otherwise, decided they'll have nothing or little to do with the regular taxation system back home, as that would be too tiresome, unfair and extortionist. They decided to siphon their wealth, or a large part of it, outside India to places like BVI, Cayman Islands, or Panama, where it'd be safe from the prying eyes of the taxmen, to be enjoyed at leisure later. Sadly, some pure soul in Panama decided to take some load off itself and brought a few lac documents to public attention worldwide! So we have yet another proof of what everyone suspected always.

BUT - If you look closely, it is not just about India, or Indians. The real issue is the Mega-Rich versus The Rest of Humanity.

Sample this -

• An Oxfam report indicates that 62 individuals now have as much wealth as half the humanity. That's a cool 320,00,00,000 people (3.2 billion / 320 crores). [ 62 Super-rich ]
• It is almost acknowledged that there are maybe a few thousand individuals (5000?) holding most of the power in the world, with the rest being mere inconsequential cogs in the giant wheel
• The Elite versus Non-Elite division was never so stark, anywhere, including the great land of equality - the USA. Hence the protests.  [ We are the 99% ]

We are the world, we are the children

In this backdrop, it is not surprising that there are two parallel financial systems running in this globalised world. One is for the 90% plus majority of the 7.3 billion people alive today. The other is for the rest who do not wish to share their riches (as taxes).

Big 5 lessons from Apple's success

Eye-popping sales figures... Industry-shaping technological prowess... Mind-numbing financial strength

What a tremendous success it has been! The Apple juggernaut has trounced all pundits' expectations, steam-rolled all competition into pulp, gatecrashed into the 'PC' market with unquantifiable fury, and totally destroyed all existing business models in its industry.

It is a heart-warming story for those who have followed (the late) Steve Jobs' life and times.

It is a detestable nightmare for the likes of HP, Dell, Microsoft, RIM, Nokia and Google.

It is grand fodder for case-studies that are being churned from leading b-schools portals.

But what is it that's made this amazing success possible? Can it be replicated by Apple itself in the future, or by anyone else? How far can Apple really go? Will it end sometime?

Here is my analysis of the Big 5 lessons from Apple's decade of uncontrolled steam-rolling, left-right-and-centre!

1. Mega success is a unique template

Really big successes - where companies trample everyone else and romp home with full glory - are almost always based on unique business models. There is nothing "standardisable" about such models except the underlying features - genuinely unique disruptive models, firm belief in what the company is trying to achieve, and a loyal fan base. So Apple's model of success just cannot get replicated by someone else. Students of management will remind us of the commoditisation phenomenon, rightly. But other than that, corporate history teaches us that such "repeats" by someone else is almost impossible. Just check out the stories of Microsoft, GE, WalMart, McDonalds, Dell, and Google to get a feel. In each of these cases, no one could repeat their business models with similar success rates.

Indian GDP's explosive imbalance

Let truth prevail

It makes for an impressive headline across India's newspapers each year - "Services sector leads sectoral growth once again; clocks double-digit growth, pushes GDP above 7%".
The latest Economic Survey of India (2011-12) presented in March 2012 pegs the share of Services in India's GDP at a staggering 59%. Agriculture and Industry both account for the rest.

Such a figure not only makes a great headline, but creates a great comfort zone for our politicians. They love it. It gives them something to showcase, and hide the systemic faults. It creates a strong illusion that the entire economy is moving forward at a good pace. An illusion that somehow the great discomfort that stems from poor contributions from both the agriculture and industry sectors can be padded using the impressive growth figures of the services sector. And to top it, taxing this sector gives easy recourse to funds.

But the truth is far from this.

The truth is : Among the three, the Services sector - by its very nature - is the poorest employer of people. And when such a sector starts dominating the GDP with the wild swagger that we see today, it's the most visible sign that a stage of imbalance has already been reached.

The risk of such an imbalance is clear : Large employment disparity, leading to social chaos. 

Trained manpower is in abundant shortage

India is a huge country, with present population nearing 120 crores (1.2 billion) people. Services sector at present does not employ more than 10-15% of the population. A huge 75% plus of India's working population works in its most unproductive sectors - agriculture and industry.

We cannot ever hope that the service sector will become the biggest employer, or a mass-rapid employer, because it needs "skilled" manpower, and those skills take time to develop; and it has been proven through many studies that the Indian mainstream education system has shamefully failed in staying apace with what corporates want today. Even the National Skills Development Mission cannot hope to remedy the situation because by the time its efforts will start paying off in a big way (if they ever), the imbalance will have tilted the ship over.

The Limits of Success - what internet companies can teach us

As we go about experiencing and studying the business model of internet companies, there is a fundamental big lesson to be learnt about managing businesses - the limits of success.

Every business, new or old, successful or not, has to undertake strategic planning for its future. It can be an informal approach (as it is with most SMEs and FMBs) or it can be a formal HQ directed approach (as with most MNCs). Whatever the model be, there was a time when strategic planning meant creating a vision for the next several decades. Then it got reduced to perhaps around 10 years, and then 5, and then not more than the present fiscal. I doubt if strategic planning today can be done with any amount of confidence even for the next 6 months.

This is especially true for internet companies. By the term "internet companies" I refer to those firms whose main business is to provide a certain platform/service to users on the internet. This platform/service can be social media (Facebook), search engine (Google), online auctions (eBay), cloud services (Microsoft) or retail store (Amazon).


What do we mean by "the limits of success?"

Going beyond strategic management, the internet companies are a great way of learning crucial lessons about the most pressing question in business management - the limits of success. Four questions define this:

1. How much can a company succeed in its business?
2. For how long can a company succeed in the same business?
3. How profitably can a company keep on, in the same business?
4. Is success permanent?

These questions almost seem encroaching in the domains of philosophy and futurology, but they remain the core questions that every manager worth his/her salt has to confront some or the other time. As I said earlier, studying the internet firms is a fantastic and enriching way of understanding the answers to these questions regarding the limits of success.


Let me illustrate my thought with some detailed examples :

The engine and the windows

• Browsers I remember way back in 1993, there was a time when the email was just beginning to make its presence felt. As the email spread around the corporate world as the most fancy thing to have, the path was set for the development of the first business model of dominating the internet - the browser. Netscape Navigator (NN) was the first classy internet browser that came along. Created by the famous Mark Andreessen, it soon became the dominating force for desktop internet search. However, this lasted only for a couple of years when Microsoft made a u-turn on its stand on the internet, and decided to come full force and destroy the NN. In classic Bill Gatesian style, Microsoft bundled a free Internet Explorer browser with its dominating operating system the Windows, and naturally, as always, it killed the NN in a short span of just 2 years. NN could do nothing and watched in horror as it almost vanished from the market. It still exists, but the glory days are over. As a dedicated user of the NN, it was quite shocking for me to see its sudden demise, and the inexorable rise of the IE browser. This - amongst other things - culminated in a legendary battle between Microsoft and the US Justice Dept, which again Microsoft won, and saved itself from being cut up in parts to avoid its monopolistic abuse of power.