Junk Viz Examples

I have obtained all three examples from Paul Kedrosky's blog, Infectious Greed.

Cross-posted to the BI Blog.

© 2009, Abhinav Agarwal. All rights reserved.

Eat That Frog


Eat That Frog!: 21 Great Ways to Stop Procrastinating and Get More Done in Less Time

Short, fast-paced book on how to succeed by learning to prioritize, plan, and execute. Good solid advice in the beginning, but lots of contradictory pieces later on destroy credibility. A bit repetitive, no great motivational writing though. A list price of US $15.95 is steep for a book this short - 21 chapters of a thousand words (or so) each.

The secrets of success are really not that secret, nor complicated. The book serves to remind the reader that the secrets of success lie in being able to prioritize, plan, and execute upon your plans. To paraphrase a dialog from the movie "The Shawshank Redemption", 'get busy living, or get busy dying.' Some of the content is repetitive, worded differently, yet trying to drive the same point. This is not the definitive book to read on procrastination, and while there is good advice, especially in the first half of the book, the latter half contains some egregious contradictions that are very difficult to ignore and seriously undermine the credibility of the entire book. If at the end of the book you get the feeling that this book is only a pitch for author's personal coaching programs, you are not alone.

As Ram Charan and Larry Bossidy point out in their book, Execution: The Discipline of Getting Things Done, successful managers and leaders are those that execute on plans, not necessarily who come up with plans or grand visions. The "doers", not the "planners". A diffused sun warms. A focused sunbeam can burn through pretty much anything.

The book is full of good advice, aphorisms, one-liners and all. But. And there is always a but. The writing is not always consistent. There are few anecdotes in the book, and then wham!! there is a long one at the start of chapter 8. And then again a famine of anecdotes. The anecdote itself is too perfect and reads contrived to appear credible.

Then there are aphorisms that you may find difficult to accept at face value. Like "leap and the net will appear". Yes, you know that the author really means to say that you should have faith and confidence, and then take the action, but if your mind starts thinking, "yeah right! That could be one short leap into oblivion" or something similar it sort of destroys the aura of hope and motivation that the book is hoping to create.

Or "listen to audio programs in your car". Why?? Isn't that going to distract you from the task at hand - driving? Driver distraction is perhaps the leading cause of road accidents, and here the author is telling the reader to add one more distraction to their driving routine?!! Listening to an audio recording of a course is also a very passive exercise - the efficacy of such audio programs in actually teaching anything of lasting value is doubtful. Of course, such audio programs have worked very well for the makers of such programs, thank you, but learning has to be interactive to be effective - not unidirectional, passive, and requiring no more than a vegetative state of mind at best.

Some of the advice is contradictory - and while the reasonable person will realize that the advice is contextual, and one of many strategies for getting useful work done, it is still disconcerting to read in one chapter (Ch 18, "Slice and Dice The Task"):
Another technique you can use to get yourself going is called the "Swiss cheese" method of working. You use this technique to get yourself into gear by resolving to punch a hole in the task, like a hole in a block of Swiss cheese.
....
This may be as little as five or ten minutes, after which you will stop and do something else. You will just take one bite of your frog and then rest or do something else.
and in the very next chapter ("Create Large Chunks of Time") the author states:
Most of the really important work you do requires large chunks of unbroken time to complete. Your ability to carve out and use these blocks of high-value, highly productive time is central to your ability to make a significant contribution to your work and to your life.
...
Set aside thirty-, sixty- and ninety-minute time segments that you use to work on and complete important tasks.
and further on in the book (Ch 21 - "Single Handle Every Task"):
It has been estimated that the tendency to start and stop a task—to pick it up, put it down, and come back to it—can increase the time necessary to complete the task by as much as 500 percent.
Sir, Mr Tracy, dude - just what exactly do you want the now totally confused reader to do??? Swiss cheese, large chunks, single-handle - what??

The book cites Learned Optimism: How to Change Your Mind and Your Life - that seems to be interesting enough and well reviewed that it may be a good idea to go read **that** book instead.
It turns out that optimists have four special behaviors, all learned through practice and repetition.
  • First, optimists look for the good in every situation.
  • Second, optimists always seek the valuable lesson in every setback or difficulty. They believe that "difficulties come not to obstruct but to instruct."
  • Third, optimists always look for the solution to every problem.
  • Fourth, optimists think and talk continually about their goals.
Success is addictive, the author reminds us. Completing an important, big task successfully gives us a surge of energy and enthusiasm. Getting addictive (in a positive manner) to this surge can help create a cycle of success.

Chapter 2 talks about goal setting, and seven steps that serve as a formula for setting and achieving goals. Common-sensical, obvious goals, like "decide exactly what you want", "set a deadline", "take action on your plan immediately", and so on. But think about it just a little longer and you will realize that deciding what you want is easy enough to say, but to define exactly what you want is not so obvious. "I want to be rich" is easy enough. How? How do you become rich? Unless you were born rich chances are you are not betting on winning the lottery to become rich. Not that that is not a plan; it is just not a very good plan. You could steal - but that is likely to land you in jail, for a very long time. You could borrow money - but that won't make you rich, since you have to pay that money back. You could start a business, or become good at something, so good in fact that people pay you lots of money so that you do that something for them. Or you could become a writer, a musician, a photographer, an advertiser, a wrestler, something. But you have to define exactly what you want to do, and then how - not so easy now, is it?

Other excerpts from the book:
"Just find out what other successful people do and do the same things until you get the same results. Learn from the experts. Wow! What an idea."

"Especially, successful, happy, prosperous people use their time far, far better than the average person."

Successful people continually put the pressure on themselves to perform at high levels. Unsuccessful people have to be instructed and supervised and pressured by others.

"Your "frog" is your biggest, most important task, the one you are most likely to procrastinate on if you don't do something about it. It is also the one task that can have the greatest positive impact on your life and results at the moment."

"The first rule of frog eating is this: If you have to eat two frogs, eat the ugliest one first."

Remember that adage about measuring twice and cutting once, marking with a chalk and so on? Well, the author offers the same advice: "The good news is that every minute spent in planning saves as many as ten minutes in execution."

The law of Forced Efficiency says that "There is never enough time to do everything, but there is always enough time to do the most important thing."

A wage or a salary is a payment for a specific quality and quantity of work that can be combined with the work of others to create a product or service that customers are willing to pay for.
People have to be willing to pay for it. Does not matter how talented you are, how hard you work, how great the product is, if people are unwilling to pay for it, you are in trouble. The work you put in, how many other people can do the work that you are doing, how many people want the product you are working to build - all these have a direct bearing on the amount of money that you will make and be paid.

Table of Contents:
  • Preface
  • Introduction: Eat That Frog
  • 1 Set the Table
  • 2 Plan Every Day in Advance
  • 3 Apply the 80/20 Rule to Everything
  • 4 Consider the Consequences
  • 5 Practice Creative Procrastination
  • 6 Use the ABCDE Method Continually
  • 7 Focus on Key Result Areas
  • 8 Apply the Law of Three
  • 9 Prepare Thoroughly Before You Begin
  • 10 Take It One Oil Barrel at a Time
  • 11 Upgrade Your Key Skills
  • 12 Leverage Your Special Talents
  • 13 Identify Your Key Constraints
  • 14 Put the Pressure on Yourself
  • 15 Maximize Your Personal Powers
  • 16 Motivate Yourself into Action
  • 17 Get Out of the Technological Time Sinks
  • 18 Slice and Dice the Task
  • 19 Create Large Chunks of Time
  • 20 Develop a Sense of Urgency
  • 21 Single Handle Every Task
  • Conclusion: Putting It All Together
  • Index
  • Learning Resources of Brian Tracy International
  • About the Author





© 2009, Abhinav Agarwal. All rights reserved.

Junk Viz Example - Yahoo Mail


Getting people to think is a good thing. However, getting them to think that your ad has a chart that just does not make sense is not a good thing.

The more people see this chart, if you can call it a chart, the more they will have questions.
  • Who are these so called 'Other Guys'? Is Google Gmail one of them? Is Hotmail there? What about the great local email provider from my country?
  • These features are not listed in an alphabetic order. Does that mean something?
  • Is Tab View the most important feature? Is it the least important? Do the other features listed on the Y-axis build upon the Tab View?
  • Does it mean that none of the vendors, 'The Other Guys', offer 'Chat', or 'Unlimited Storage'? Their bars do not go up that high.
  • Are these the only features to look for in an online email service? I don't see an entry for 'Calendar'. Surely that's important.
  • Why not include other useful features like Labels, Threaded conversations view, Integrated Calendar, Post to Blog s, Facebook / Twitter integration, Rich text editor , Missing Attachment Detector, Address Suggestion, Integrated attachment viewer , Mobile support, SMS integration, and so on... ?
This chart just does not make sense.
A shining example of a junk chart.

A simpler and obvious way of showing such a comparison would be to simply use a table:
or

This at least gives a more honest picture of the features that the 'Other Guys' have and don't have.

Cartoony charts that serve no other purpose than to convey an illusion of geekiness should be avoided. Who anyway compares email providers today? Don't most people today have accounts on two or more of Hotmail, Yahoo Mail, Google Mail, Rediffmail, IndiaTimes mail, AOL, etc... ?

In the world of Web 2.0 you create a buzz for your products through netizens, who blog, twitter, digg, and post on Facebook, Orkut, MySpace about your products.

Also cross-posted to oraclebi.blogspot.com

© 2009, Abhinav Agarwal. All rights reserved.

Junk Viz Example



An article, "Home loan rates go down", from SiliconIndia, posted on Monday June 22 2009, has a small graphic on the left of the article. It is a good example of a junk visualization. It cannot even be called an example of a junk chart since there is no data at all. It only shows a pseudo-3D chart with small houses perched on top of each bar, and with a line arrow trending downwards, to ostensibly signify that something is going down. To make things worse, there is a reflection effect added.
Is the chart conveying any additional information that is not in the article? No.
Is the chart conveying information included in the article in a better, more understandable manner? No.

Not good.

Cross posted to the Oracle BI Blog - Junk Viz Example

© 2009, Abhinav Agarwal. All rights reserved.

Google Books and New Features

Google Books recently added some additional features to their site, that purport to make the site much better to use and more useful. The new features, as listed in a blog post, include the following:

1. Embeds and links
2. Better search within each book
3. Thumbnail view
4. Contents drop-down menu
5. Plain Text Mode
6. Page Turn Button and Animation
7. Improved Book Overview Page

This is all very useful, and in fact the availability of books, whether in limited or full form, is a great benefit since in many a case just being able to read a few pages from a book can make the difference between spending good money on a great book and on one that makes you feel you could have spent that money on a different book, or waited for a cheaper edition, or maybe not bought the book at all. Sometimes the ability to see and read a specific passage from a book is also important if you are engaged in some research work or need to have confidence in a reference you are citing. Always check back with the primary source. Just as you have news sites and blogs and more that routinely embed maps into their pages using Google's Map API or simple URL and iFrame based linking feature, the feature to embed book pages and passages may also become popular enough, though there are alternatives available here - you can simply type in a line of two that you want to quote.

But, what I would like very much is to combine the book scanning exercise of Google with the combined knowledge of a million minds from Amazon.com. The wisdom of a million strong crowd on Amazon lends an aggregate wisdom that is difficult to recreate, anywhere, I believe. Amazon has an almost infinite wealth of information on reviews that readers have written, browsing and purchase patterns, navigation paths followed, trending information on books sales and sales rankings, topics, categories, and almost on every aspect of a user's behavior while online on the site that they have an erected an almost insurmountable barrier for others to surpass.

Google and Amazon are fierce competitors in the making, even if they or others do not realize it yet, more so than Google and Microsoft or any other company. And both Google and Amazon are so powerful that they are scaring off a lot of players into the other's arms or into a wholly separate direction. Amazon's Kindle reader has book publishers more than a little worried about the monopolistic hold it could obtain over the e-book format while at the same time interjecting itself in-between the customer and the book publisher. Google's book scanning project and its deal with authors has the US government scrutinizing the deal, and Google's massive impact and presence on the internet has almost everyone else worried.

© 2009, Abhinav Agarwal. All rights reserved.

HBR-What’s Your Google Strategy?



"What’s Your Google Strategy?" by by Andrei Hagiu and David B. Yoffie, from the April 2009 issue of Harvard Business Review, talks about the power of multi-sided platforms, how to play with MSPs, how to extract value, when to build your own and when to partner with an existing platform. Google, Amazon, eBay are all examples of multi-sided platforms. MSPs are intermediaries that interject themselves between your customer and you, and provide some value of course. Amazon for example connects publishers, book sellers, and customers. Microsoft Windows connects consumers, application developers, and PC makers, and thus is a three-sided platform. Using the examples of Amazon and ToysRUs, LinkedIn and Google's OpenSocial, Electronic Arts and Microsoft XBox, and others, the authors illustrates the potential of MSPs to encroach on the turf of their partners and how these relationships can quickly sour in the absence of a good understanding of potential conflicts of interest down the road.

MSP relationships can turn sour if the MSP decides to raise prices, or vertically integrate ("embrase and extinguish" strategy as Microsoft has been accused of practicing), or by simply luring away your customers since the customer sees the MSP more than he sees you.

Four star article. Reasonably well-written, but falls prey to the lure of using the word 'Google' in its title to attract more eyeballs than would be with a title like 'Working With Multi-Sided Platforms'. A second star docked for this chicanery.


© 2009, Abhinav Agarwal. All rights reserved.

Enterprise 2.0

One book I am looking forward to (and now on my Amazon.com Wishlist).
Andrew McAfee has a new book coming out later in the year, Enterprise 2.0: New Collaborative Tools for Your Organization's Toughest Challenges. The first chapter, the author informs us in his blog post and also via a Tweet, is available for download, from the publisher's web site, here. The PDF is is 20 pages long, and takes half an hour to go through.

For those who don't know the author, Andrew McAfee is "... currently an Associate Professor in the Technology and Operations Management area at Harvard Business School, and a visiting Associate Professor at the Center for Digital Business in the MIT Sloan School of Management", and coined the phrase "Enterprise 2.0" in an article, Enterprise 2.0: The Dawn of Emergent Collaboration, in the Spring 2006 issue of the Sloan Management Review. That was shortly after the release of Google's Gmail in 2004 (Wikipedia article), that really was the first popular and successful example of Web 2.0. Flickr could also be considered in the same category, but in my opinion Gmail is what really got people talking about the possibilities of Web 2.0 technologies in making everyday web based interactions way more powerful than had been thought possible.
It’s a book about how businesses are using a new set of technologies that appeared over the past few years on the Internet.
My thoughts, based on this one chapter:
First, it’s an overview and description of a bunch of new and (to many people) strange technologies and technology based communities: blogs, Facebook, Wikipedia, Twitter, wikis, prediction markets, the PageRank algorithm, Delicious, social networking software, and others. It’ll describe what each is, concentrating not on its technical details but instead on what it’s used for—what tasks it accomplishes and what needs it’s designed to fill.
Okay - I have a quibble here. Anyone in an enterprise who is serious about the topic and picks this book would, should be disappointed if it does not have at least some technical background and information on the technologies described: blogs, wikis, search algorithms, etc... I am not talking about getting into describing the APIs with code stubs and all, but a basic primer on the technology would be a sine-qua-non. To not talk about the underpinnings of these technologies is to somehow perpetuate the feeling that IT managers either don't need to or are somehow incapable of grasping these basics.
This is basically a sort of comment made whilst flying blind, given that I have not read the book.
  • The second point, that I wonder about aloud, is how this book will manage while treading the fine line between using examples of current products and companies to illustrate the principles and benefits of Web 2.0 as applied within enterprises on the one hand, and not end up relying so much on these companies and their names that the book quickly reads dated in just a couple of years because the companies seem quaint or have gone out-of-business.
    There were enough examples of books that came out at the turn of the century proclaiming that Ariba, Webvan, Pets.com, Priceline.com, and what have you were the harbingers of the new age of technology, of doing business on the net, and how these companies would render all the "old world" companies irrelevant and out of business. Guess where these companies are today?
This should be a fascinating chapter. Especially if these tools are really generating results:
I’ll use case studies, supported with both well established theories and new frameworks, to show how and where the tools of Enterprise 2.0 are being deployed and generating results.
Given that many enterprises, with a few notable exceptions, are still struggling to emerge into the world of Web 0.1, let alone Web 2.0 or Enterprise 2.0, this book for most enterprises may well read like a technical description of the Star Trek Holodeck as it would appear to people from the medieval ages; so very advanced and powerful and incomprehensible as to be indistinguishable from black magic and sorcery, to be reviled and burned at the stake of bureaucracy. Maybe I am fretting excessively. However, read just a few posts from http://thedailywtf.com/ and you may just change your mind.

While at the time of writing this post there is no cover image available for the book on Amazon.com, McAfee had blogged (Judging by the Cover… : Andrew McAfee’s Blog) about the book and its cover, which I have taken the liberty of reproducing here in this post. I like the title and all, but I find the cover indescribably ugly and unremarkable. Light blue lines?? Boring light blue color?!! Enterprises are not boring places to be; they can be exciting and full of fun and offer incredible scope for effecting change on a grand scale. Black on white, white on red, anything would look better than this.
I seriously hope the final cover is different, and more importantly, better. If not, then at least it could be rectified in subsequent editions: paperback maybe.
Though in the larger scheme of things, one could argue that you should not judge a book by its cover. Yeah right. Whoever said that had never heard of advertising and the concepts of "blink".

I will post a review of the book when I get my hands on the book. Needless to say, US$19.77 (that is almost a thousand Indian Rupees), even after a substantial 34% discount on Amazon.com, is costlier than I would be willing to pay. Note that I said "willing" and not "cannot". That is a subtle but important economic distinction. I shall therefore have to wait for it to turn up at some lending library, or with a financially better-off colleague, or at the Amazon Vine program, or as a digital edition on Safari, or if I wait even longer, for a paperback edition that is priced lower and within the thresholds of my "willingness".



© 2009, Abhinav Agarwal. All rights reserved.

A Case of Exploding Mangoes


A Case of Exploding Mangoes (Vintage)




Wickedly funny, acerbic wit, well narrated plot, reasonably fast pacing. The mention of a mysterious character named OBL will appeal to many in the west, while the foibles of those in power will be more than familiar to people in the sub-continent.
The book is a work of fiction, written by a Pakistani author, about real characters. General Zia Ul Haq, dictator and President of Pakistan, was killed in a plane crash some 20 years ago. This book is then a fictional take on what could have transpired - needless to say the book's plot centers on the assertion that Zia did not die in an accident, but was done in by one of his own men, who could not sit around waiting for the good General to be done in by someone else.
Before morning payers on 15 June 1988, General Mohammed Zia ul-Haq's index finger hesitated on verse 21:87 while reading the Quran, and he spent the rest of his short life dreaming about the innards of a whale. The verse also triggered a security alert that confined General Zia to his official residence, the Army house.

By way of some historical background, General Zia was the head of the Pakistani Army, who overthrew the democratically elected government headed by Prime Minister Zulfikar Ali Bhutto (who also is the father of Benazir Bhutto) in 1977, and ruled as dictator till his death in 1988. During this time he lent a more than helping hand to the mujahideen effort in Afghanistan to fight against the Soviets, with the help of the Americans and CIA, and their money of course. It's another matter that the mujahideen gave way to the Taliban, who sheltered Al Qaeda, and then you had 9/11 and all sorts of other not-so-nice things that happened to the world. Zia also had other stellar achievements that endeared him no end to India, but these are not germane to this review.

On General Zia's left, his former spymaster and the head of Inter Services Intelligence, General Akhtar, seems weighed down by half a dozen medals on his chest and drags his feet as if he is the only man in the group who knows that they shouldn't be boarding this plane.
Thrown into the plot are dozens of cases of mangoes, a messenger of a curse in the form of a crow, a blind woman condemned to be stoned to death who is not shy or miserly or less than eloquent with her curses for the one she holds responsible for her plight, Zia's wife who declares herself a widow in front of her husband, Major Kiyani (now the General of the Pakistani army), US Ambassador to Pakistan, an esteemed guest in the construction business who is introduced only by his initials - OBL - surprise surprise, an imprisoned secretary general of the sweeper's union, and what have you.

There are two plots that proceed in parallel, one that is in the present and one that is in the past, and in the first tense, narrated by Ali Shigri, a soon-to-be commissioned officer and Air Force pilot, who along with his friend Obaid plot manically to do in the general, to find out what happened to his father, Colonel Shigri, who committed suicide, or at least that's what the autopsy stated, and to avenge his death.
As the chapters go on, the two plots converge - to the day that Zia is killed in a plane crash.

The 2nd OIC is exhausted from his business with my mother and I can see an appeal to my better sense on its way. I clench my stomach muscles against the impending "cream of the nation" speech. I don't want to throw up. The cell is small and I have no idea how long I am going to be here.

"You are the cream of our nation," he says, shaking his head.

As Obaid used to say, "God's glory. God's glory. For every monkey there is a houri."
Look at the arrangement of fruit salad on my tormentor's chest, above the left pocket of his uniform shirt, and you can read his whole biography. A faded paratrooper's badge is the only thing that he had to leave his barracks to earn. The medals in the first row just came and pinned themselves to his chest. He got them because he was there. The Fortieth Independence Day medal. The Squadron Anniversary medal. Today-I-did-not-jerk-off medal.

No sacred cows. Though if you start to wonder about it, cows are not sacred in Pakistan. Because, you see, they eat cows, in addition to other forms of food. No sacred cows - not Pakistan, its army, its generals, the ISI, the mujahideen, Islam, India, heck - even the revered Mangeshkar sisters, Lata and Asha, are not spared. Though the sisters are not given anywhere as harsh a treatment as is reserved for General Zia Ul Haq, the long-since assassinated President and General and dictator of Pakistan. Zia's very un-Islamic lecherousness for un-Islamic ladies, or his piety, or his belief in his piety, or his complete paranoia, which as it turns out was not misplaced, or his belief in the love his countrymen have for him, which however turns out was indeed misplaced, as Zia and his bottom find out one evening. Hanif takes some decidedly wicked pleasure in writing about Zia - whether it is Zia's itch in his posterior caused by eating too many sweets, or his maudlin reactions to his own religious delusions, or his unshakable paranoia that someone is out to get him.
All the things that break an ablution had been eliminated from his daily routine - garlic, lentils, women who didn't cover their heads properly. But since he had confined himself to the Army House, this itch had started.

All this is fiction, but most readers from the Indian sub-continent would have no trouble identifying Zia with any local or national politician.

I cannot judge the literary merits of the book, but it is hard to put it down once you start reading it. The language is coarse at times, the humour is always, always wicked, dark. Sharply observant, withering in its wit. I only wish someone were to write something similar on some of our esteemed Indian sacred cows too...

Indian Hardcover Edition from Random House - for reasons I don't quite care to try and understand, the Indian hardcover edition is the only one to actually have General Zia's photo on the cover, and that too so prominently, and none of any mangoes, exploding or otherwise.



Alternate covers:


© 2009, Abhinav Agarwal. All rights reserved.

Sakleshpur Mile Post



Milepost on NH48, headed west, 5 kilometers from Sakleshpur, in the state of Karnataka.


© 2009, Abhinav Agarwal. All rights reserved.

HBR Article - Companies and Customers Who Hate Them

Written two years ago, Companies and the Customers Who Hate Them, by Gail McGovern, Youngme Moon, from the June 2007 issue of the Harvard Business Review reads remarkably prescient, especially when talking about the US credit card industry and the fact that it has taken an act of the US Congress to try and put a stop to their rampant practices of gouging customers through arcane fine-print legalese and rampant overcharging and imposition of fines on customers.
One of the most influential propositions in marketing is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by binding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays.
Think about it. It's true, isn't it? Your bank is looking to impose a fees if you do not use the ATM card at all, or if you use it at another bank's ATM, if you come into the bank, if you ask for new PIN, if in their opinion your signature on a cheque does not match the one on their records, and for reasons so flimsy and obvious you wonder if they wouldn't be better off just telling you straight up that they wish to steal your money, "Sir, we want your money, but have run out of ways to do that legally, so if you would be so kind to hand over your wallet. Yes, the wallet with all the money in it. Thank you, and that will be all for the day. Till next time."
But many firms have discovered just how profitable penalties can be; as a result, they have an incentive to encourage their customers to incur them – or, at least, not to discourage them from doing so. Many credit card issuers, for example, choose not to deny a transaction that would put the cardholder over his or her credit limit; it’s more profitable to let the customer overspend and then impose penalties.
When some banks tally up customers’ accounts at the end of each day, for example, they debit checks in order of size – biggest check first – rather than chronologically. This increases the chance that the remaining checks will bounce, allowing the bank to charge the customer for multiple overdrafts.
According to one estimate, consumers paid $53 billion in overdraft fees in 2006, a 58% increase from five years earlier
Profits for American banks have increased by close to 67% over the past ten years. Stock prices are up for the largest banks, and so are revenues. So why shouldn’t banks rely on high fees?
Why wouldn't they? They did. Till the financial mess created by banks hit the fan. When over-leveraged banks had to approach the government for trillion dollar bailouts. Which by the way came out, again, from the taxpayers' pockets. Till the stock prices of these banks had fallen by 95% or more. Which hurt the common shareholders. Until they had no leverage left to fight credit card reform.

Or take the case of health clubs.
Health club companies have a long history of luring customers with attractive short-term offers, assaulting them with aggressive sales pitches, and then binding them with long-term contracts. That’s because some of their most profitable customers on a cost-to-serve basis have been those who were enticed to sign up for a long-term membership but then rarely visited the club.
In India chains of health and fitness clubs are starting to gain traction across the country. Bangalore has seen aggressive advertising by Talwalkar's and Gold's Gym to attract membership. Their monthly membership fees is generally twice or thrice the cost of an annual membership's monthly cost. Why? Because the person who takes up membership for only one month is likely to frequent the club more often than someone who has bought annual membership. And he is the ideal fitness club member, as far as the fitness club is concerned. The only way he or she could become an even more ideal customer is by taking up the personal trainer option, that costs several thousand rupees per month. And what does the customer get in return? Any guarantees? Any guarantees that are legally enforceable? Is there any service level guaranteed? If you come into the club at 6pm, does the club promise that you will have to wait no more than 15 minutes before you get access to a treadmill? No. Does it put into the contract that if a machine breaks down it will be repaired within 48 hours or else you will get a 5% credit on your fees? No. That is because there is no competition as far as health clubs are concerned. Fitness clubs are very sensitive to local competition, and not very to distant competition. If you are living in Colaba in South Mumbai, it does not matter to you if there is a much better gym that ofers membership at half the fees of your local gym if that gym is in Mulund. Right? Or if your Malleswaram gym is costlier than the gym in Kanakpura. What does matter is if there are two or more gyms offering comparable services within a kilometer or two of each other. In that case, one of two things happens: if the catchment area that these gyms are serving is populous and rich enough, then all the gyms will have enough membership to not resort to price competition. If the number of potential patrons is not in surplus, they will enter into an unofficial cartel and keep prices artificially high, since price competition by any one gym will soon drive prices down for all gyms.

Keep in mind that one reason why such practices evolve in the first place, take root at one department, then within the whole company, and are quickly imitated by the industry, are not that difficult to fathom. The manager who adopts these practices may not be stopped dead in his tracks by his manager, either knowingly or unknowingly. The manager who gets results, and by results I mean a better than expected return, is rewarded. Even while the company is parroting out sermons to its employees within and to its customers outside that it believes in the highest standards of ethics. Employees within the company will believe, correctly, that the company expects its employees to do as it does, not as it says. Before you know it, pretty much the entire company has walked many a mile down this slipper slope of ethics, and no one really knows who took the first step, or when. It is unwritten company policy. It is the way that things are done. New recruits learn that fast. Those who don't get weeded out quickly. Till there is near uniformity as far as behavior is concerned.

It takes a crisis of mortal proportions to jolt the company out of its ehtical slumber.

© 2009, Abhinav Agarwal. All rights reserved.

Transposition Error

Should read "CAB STAR" instead of what it actually does. Most likely a Swaraj Mazda or a Nissan 4 tonne truck.



© 2009, Abhinav Agarwal. All rights reserved.