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Ten interesting things we read this week
Some of the most fascinating topics covered this week are: Lifestyle (Learning, growing and thriving in adversity), Investing (ESG at a tipping point), Technology (Long-tail problem in AI; How India became a hack-for-hire hub) and Geopolitics (China has blown its historic opportunity)
Image: Shutterstock
In this pandemic, most people our concerned about losing their jobs. And those who have are worried about losing them or pay cuts. In such a situation what should one do to gain edge and advance in their careers? In this webinar, Ralph Simon (founder, Mobilium Global) moderates a chat with Saurabh Mukherjee (founder and CIO, Marcellus Investment Managers) and Anupam Gupta (Investment Research Consultant), wherein they discuss their upcoming book and take some interesting questions.
India’s economy has tripled in size over the past twenty years. And yet, the generation that propelled this growth is facing rising levels of stress and depression. Furthermore, the new generation entering the workforce today dreams big but faces a highly competitive work environment. How can both these generations fire on all cylinders and lead fulfilling lives? Mr. Mukherjee and Mr. Gupta attempt to answer this question by using the principles of simplicity, specialization, creativity, and collaboration.
They talk about their upcoming book The Victory Project: Six Steps to Peak Potential, and offer gems of advice and examples to lead a successful and happy life. They explain the Simplicity Paradigm, which consists of 3 layers: 1) Specialize, simplify, spiritualise, 2) Clutter reduction, Creativity and memory, collaboration, 3) This is the result of all the six points of the above layers. On staying positive in current pandemic, they say the key is to have a routine. Mr. Mukherjee says that the central to success is building a routine. Mr. Gupta says that simplification in life has been forced on us in this lockdown, and meditation and decluttering is the key. They also suggest reading extensively to gain an edge.
2) Understanding and shaping consumer behavior in the next normal [Source: mckinsey.com]
The current pandemic is unique for the world. Many are struggling to cope up with their daily routine in this crisis. People no more can go to gym, shopping malls, social gatherings, etc. Such disruptions in daily experiences present a rare moment. The Covid-19 crisis has caused consumers everywhere to change their behaviors—rapidly and in large numbers. In the United States, for example, 75% of consumers have tried a new store, brand, or different way of shopping during the pandemic. Even though the impetus for that behavior change may be specific to the pandemic and transient, consumer companies would do well to find ways to meet consumers where they are today and satisfy their needs in the post-crisis period.
In such a situation, the following five actions can help companies influence consumer behavior for the longer term: 1) Reinforce positive new beliefs: Companies that attempt to motivate behavioral change by ignoring or challenging consumers’ beliefs are fighting an uphill battle. When consumers are surprised and delighted by new experiences, even long-held beliefs can change. 2) Shape emerging habits with new offerings: Companies can nudge consumers toward new habits through product innovation. For instance, the Covid-19 crisis has spurred consumers to become more health oriented and increase their intake of vitamins and minerals. Companies like Unilever are pushing such products.
3) Sustain new habits, using contextual cues: To help turn behaviors into habits, companies should identify the contextual cues that drive the behaviors. For e.g., more consumers are keeping hand sanitizer and disinfecting wipes near entryways for easy access and as a reminder to keep hands and surfaces clean. 4) Align messages to consumer mindsets: The quality of a company’s communication and its ability to strike the right tone will increasingly become a competitive advantage. McKinsey’s consumer-sentiment surveys show that consumers are paying closer attention to how companies treat their employees during this crisis—and taking note of companies that demonstrate care and concern for people. 5) Analyze consumer beliefs and behaviors at a granular level: Only monitoring product sales alone won’t help. Companies must also conduct primary consumer-insights work, with a focus on identifying changed behaviors and associated changed beliefs and motivators to get a comprehensive picture of the changing consumer decision journey.
3) ESG at a Tipping Point [Source: CFA Institute]
ESG investing has been gaining prominence lately. Amid the market turmoil of 2020’s first quarter, some predicted that ESG would be exposed as a bull market luxury: “Sustainability” is easy to champion during boom times, but when markets plunge, priorities like securing retirement savings dominate investors’ hierarchy of needs. ESG has defied the naysayers by continuing to attract capital in 2020. According to Morningstar research, mutual funds and exchange-traded funds (ETFs) designated as sustainable attracted $46 billion of inflows in the first quarter, in contrast to the several billion in net redemptions suffered by the overall fund universe. More than 80% of sustainable assets are in Europe. But ESG-oriented funds in the United States attracted record inflows in the first quarter, surpassing their previous record set in the fourth quarter of 2019.
Investor preference for passive, index-tracking strategies has carried over to ESG. This trend has been most pronounced in the United States, where index funds and ETFs captured 80% of sustainable flows in the first quarter of 2020, up from 60% in 2019. In February, Morningstar Indexes published research examining the risk profiles of its ESG-screened equity benchmarks. They found that 72% of the ESG indexes held up better than their broad market parents for the five-year period through year-end 2019. Research by Morningstar and others, across indexes and funds, has found that companies that score well on ESG also tend to exhibit higher profitability and stronger balance sheets, which make them more durable during times of market stress.
Efforts to bolster reporting and standardize ESG corporate disclosures will improve the company-level data that is the fundamental building block of portfolio construction. As the new normal of the post-pandemic world takes shape, there’s little doubt that ESG investing will grow in importance. Not only are sustainable assets likely to increase, but the materiality of ESG issues will be more widely accepted.
4) ‘It’s bullshit’: Inside the weird, get-rich-quick world of dropshipping [Source: Wired]
People are always on the lookout to get rich quick. And dropshipping is one of the tools that youngsters are using to get there. Dropshipping is a "fulfilment" method. At one end of the supply chain, an entrepreneur identifies a product – usually through Chinese e-commerce platform AliExpress – which they think they can sell to European or American consumers. They create a website using Shopify, and identify and target buyers, typically using Facebook ads, although you will find dropshippers on other platforms, including Instagram, or selling through marketplaces such as online homeware store Wayfair. When an order is received, the dropshipper purchases the item through AliExpress, and has it shipped directly to the buyer, pocketing their mark-up minus marketing spend.
Looking at success of some, many want to get in. Thomas Despin, a former dropshipper, is something of a legend in the dropshipping scene, having gained attention with a Medium essay he wrote announcing the closing of his business, headlined “11 months & $750,000 later, I decided to close my drop shipping business. Here’s why”. There is a sense among many in the Balinese town Canggu scene that the glory days of dropshipping may be coming to an end. There’s a stigma around dropshipping, as if the banknotes you earn are unusually smeared with grubby fingermarks. The most important decision a dropshipper can make, perhaps, is knowing when to get out.
When you’re done with dropshipping, where do you go? After closing his dropshipping store in September 2017, Despin purchased 1.38 hectares of Bukabuka island, and moved there in October 2018. He plans to open a sustainable retreat called Reconnect here in 2020. Despin is something of a legend in the dropshipping scene, having gained attention with a Medium essay he wrote announcing the closing of his business, headlined “11 months & $750,000 later, I decided to close my drop shipping business. Here’s why”. “I’m the opposite of what dropshippers like to say, because they like to see themselves as good entrepreneurs because they made money,” he says. “I’m completely fine with saying that I made a lot of money, six figures, and still I think I was dumb. I didn’t know what I was doing.”
AI has become a game now only the tech giants can play. The knowledge and resources that are necessary to innovate in the space are now simply out of reach for most individuals and startups. How can we change that? The only answer is to build new technology that levels the playing field. Much of society now seems to assume that the only way we can ever hope to wrest that power away from the likes of Google and Facebook is, ironically, through the exercise of yet another kind of centralized power—top-down and inevitably heavy-handed government regulation. The truth is, however, that it’s a monumental failure of imagination for us to believe that we are at the end of history — that not a single path forward exists for a startup to build technology that shifts the balance of power.
The author of this piece says how this is possible through building robot hiveminds. The author worked on an effort at Google X to build a network of robots that shared a collective intelligence. Every aspect of hivemind — every line of code written, every resource deployed — was controlled by the author and his team. It was a centralized system pretending to be a decentralized one — a somewhat “communist” simulacrum of a hivemind. But what if such intelligence could be born, not from the efforts of just one company, but from the aggregate knowledge of countless people working independently from far afield to contribute diverse signal to the collective?
Enter crypto. At its heart, crypto is a tech movement that offers us new tools for the bottom-up governance of large systems. The very term “decentralization” in the space refers to a class of power structures whose balance is tilted in favor of communities instead of central points of control. Today, the knowledge and resources that are necessary to innovate in AI are held in the pockets of giants — well beyond the reach of most individuals and startups. But, through the creation of efficient and global markets around them, they can be made more accessible. We might discover that market-based systems that are built bottom-up offer society a new approach, one that’s more disruptive to entrenched power structures, for building intelligent computer systems. The difference will be in who ends up controlling them. 6) Adam Grant on how jobs, bosses and firms may improve after the crisis [Source: The Economist]
The way we work might change forever. And management guru Peter Drucker had predicted this in 1993. He argued that “commuting to office work is obsolete.” The experiences from past recessions and crises suggest that covid-19 is likely to transform three features of our work lives: job satisfaction, ethical leadership and trust. Millions of people have lost their jobs and countless more have taken pay cuts or furloughs. Even those fortunate enough to have a secure job may be more thankful for aspects of work that were once taken for granted. People would be grateful for having a job.
Heightened gratitude is good news for job satisfaction but potentially bad news for job quality. It could lead bosses to take advantage of those willing to tolerate low pay, poor conditions and so-called “bullshit jobs” (ie, work without actual purpose). The behaviour of managers points to a second trend: how leadership will change. During times of stress, humans often revert to their basic instincts. Amid the crises, we’ve seen some executives forgo lucrative pay. But we’ve also seen spectacular fails—notably at the electric-scooter company Bird, where more than 400 employees had signed-in for a “covid-19 update” videoconference, only to hear a disembodied voice announce that they were being let go.
Yes, layoffs reduce costs, but they also hurt productivity and innovation as people with valuable skills are sent packing. Those who remain are distracted by survivor’s guilt, anxiety and searching for more secure jobs. The level of trust that we feel towards our colleagues and our companies is likely to become more extreme—in both directions. On the one hand, the teams and firms that stuck together during the crisis should be even tighter-knit on the other side of it. On the other hand, we’ve seen too many managers respond to covid-19 with distrust. Some companies are monitoring keystrokes and tracking behaviour as people work remotely. We don’t need micromanagers, we need “macromanagers” who create clarity amid chaos with meaningful goals and purposeful roles. Surveillance doesn’t just undermine employee loyalty, it can actually make managers more suspicious, creating a vicious cycle. 7) China has blown its historic opportunity [Source: Project Syndicate]
China has always been ambitious about dominating the world. It even had the chance of being a hegemon in the current pandemic. But Arvind Subramanian, former chief economic adviser to the government of India, feels that China has lost their chance. All the elements of success seemed to be falling into place for China. It launched the Belt and Road Initiative (BRI), a transnational infrastructure investment program intended to define a vision of a China-led, post-Bretton Woods world, much as the US Marshall Plan did for the post-1945 order. China also aggressively promoted the renminbi as an international currency, and persuaded the International Monetary Fund to include it in the basket of reserve currencies underpinning Special Drawing Rights (the IMF’s unit of account) far sooner than was justified.
The Covid-19 pandemic offered China an opportunity to cement this strategy of remaking the world economic order on its terms. China could have provided unconditional short-term liquidity – in both renminbi and dollars – to developing and other economies facing major capital outflows. Regarding trade, China could have offered freer market access to poorer countries ravaged by Covid-19. It could also have ramped up production of essential medical supplies to fight the coronavirus – face masks, testing kits, protective equipment, and ventilators – assuring their high quality and offering to make them available to any country via the World Health Organization at concessional prices.
So what went wrong? China’s recent actions have undermined its global aims. The geographic range and intensity of the Chinese regime’s belligerence are now familiar, with the ever-growing list of targets including Xinjiang, Tibet, Taiwan, Hong Kong, India, the South China Sea, the Philippines, Australia, Europe, the US, and Canada. And instead of being transparent regarding the origins of Covid-19, China has persuaded the WHO to connive with its own obfuscation. With Xi’s aggressive insecurity having replaced Deng’s calm confidence, China now places a premium on settling its borders and returning to the glory days of the Middle Kingdom. 8) How India became a hack-for-hire hub [Source: Livemint]
The Canadian internet security watchdog, Citizen Lab, exposed a Delhi-based firm called Belltrox Infotech of hacking. This article provides a peek into the underbelly of an industry which is often described using a broad umbrella term: hack for hire. The targets are varied: corporate employees, politicians, and even ex-lovers sometimes. And what’s on offer is often “low-level" hacking—email passwords, access to social media accounts. With very few avenues to make money as an ethical hacker in India, talented young engineers or upstarts who wish to experiment have been exploring the dark side for a while now. And their numbers are increasing.
A May 2020 Google Threat Analysis Group (TAG) report highlighted an interesting emerging trend: that these “hack for hire" operations are now increasingly being mounted under the aegis of formally registered firms. “Many are based in India," the report said. Hacking-as-a-service (HaaS) has existed on the dark web for years, according to security experts, and, more importantly, they have existed in India for just as long. Security researchers in India often do not get the same respect in the country as global counterparts, which drives them to the dark side. The lack of respect often drives hackers to take the darker route; money replaces respect.
According to security researcher Karan Saini, hacking an individual’s Facebook or email account in India is a job that could fetch as little as Rs2,000 for someone who is willing to do it. However, there are easy-to-find websites on the dark web that are filled with clients promising $500 (approximately Rs37,000) for the same job. That, in a nutshell, explains the motivations which animate the hack-for-hire hubs which are cropping up in India.
9) Now you can work from the beach [Source: The Economist]
The current pandemic has made most of us work from home. But if you want you can now work from a beach as well. Mia Mottley, prime minister of Barbados, intends to introduce a “Welcome Stamp” for visitors to “work remotely in paradise” for up to a year. Like most of its Caribbean neighbours, Barbados has been good at keeping covid-19 out. Normally tourism brings in more than half of its foreign earnings. Now, many tourists are banned and the economy is reeling. The tourism minister, Kerrie Symmonds, puts unemployment at close to 40%.
Before now, moving to Barbados legally was difficult. Getting a work permit or immigrant status meant weeks or months of form-filling. Workers had to pay Barbadian income taxes. The new procedure looks quick and easy by comparison. For a fee of $2,000 for one person, or $3,000 for a family, you can take your Zoom calls from a real pristine white sandy beach, instead of merely selecting it as a virtual background.
There will be some checks on new arrivals. We do not want “the scum of the earth, but decent and upstanding types”, says Mr. Symmonds. Applicants must have health insurance, and the main breadwinner must earn at least $50,000. But otherwise the gates are open. “We welcome all. Everyone,” says Ms. Mottley. “All must breathe, in this world and in this country.” Other Caribbean islands are also considering such schemes. Bermuda has also announced one. So if you want to work from the beach, relaxed bathing in sun, there you have!
Rains have been a concern for many centuries to India. But, a century of meteorological progress means that Mr. Madhavan Nair Rajeevan, the boss of India Meteorological Department in New Delhi, can say with much more confidence than his predecessors how fast the summer monsoon will sweep up the nation and how much rain, overall, it will bring. Even the winds play an important part in monsoon rains. As the land cools in the autumn, north-easterly winds replace the south-westerlies. Because the winds are mostly dry they are not so important to farmers, though they do bring rain to some parts of southern India. But they matter a great deal to navigation, and thus to human history. The monsoon rains feed what has always been the most populous part of the human world.
Had sailors, traders and holy men not followed their lead on the monsoon winds, Asia would not be the heterogenous place it has been through history—and remains today, despite the nationalist narratives and more strictly bordered lives its 20th-century states forced on their newly minted citizens. The British also had influence in India. William Roxburgh was a surgeon who left Edinburgh in 1772 to join the East India Company. He was one of those who, through measured observation, laid the foundations of modern Indian meteorology. The Godavari’s cultivators, he pointed out, depended entirely on the rains: “when they fail, a famine is, and must ever be the consequence.” The solution was to harness the water that “passes annually unemployed into the sea”, retaining it for farmers’ year-round use.
The misery is one example of how water and the want of water determine inequalities, and even fates. Another can be seen in attacks on people of lower caste using water tanks customarily monopolised by the upper castes. There are also water wars between states. These phenomena are not new—the bitter dispute between Karnataka and Tamil Nadu over extracting water from the Cauvery river dates back to the 1890s—but they speak poorly of modern India’s ability to manage the stakes in its monsoonal roulette.
