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Ten interesting things we read this week
Some of the most fascinating topics covered this week are: Technology (Rise of the invisible hand in India's stock markets; Why payment companies want you to tap and pay), Leadership (Lessons from a chess master; Leading when you're not in charge), Economy (India needs to look east at Taiwan) and Health (Sadie Lincoln is rewriting the fitness story).
Image: Shutterstock
Here are the ten most interesting pieces that we read this week, ended March 27, 2021.
1) The rise of the invisible hand in India’s stock markets [Source: Livemint]
There are a few firms in India like Hudson River Trading, Virtu Financial, Tower Research Capital, Jump Trading, Getco, Progress Apama and FlexTrade Systems that not many people would have heard about. These are global majors doing business worth hundreds of millions of dollars in India in the highly-secretive world of algorithmic trading in stock markets. Algorithmic trading—known as algos in market parlance—refers to a software designed to execute trading strategies. Algos can execute trades in a fraction of a second, which is just not possible to do manually. In the world of algos, the speed at which the trades are executed is of paramount importance. A split-second delay and the potential gains could be significantly reduced.
Most of the large Indian brokerages like Edelweiss Securities, IIFL, Kotak Securities and Motilal Oswal Financial Services among others also offer algo-based trading facilities. They service foreign and domestic institutional investors who prefer algos to execute strategy-based trades in India. “Algo trading has gained a lot of traction in the Indian markets with around 60% to 70% of the daily turnover estimated to originate through algos," said Kunal Nandwani, cofounder and chief executive officer, uTrade Solutions, a fintech company that develops algo-based trading platforms. “Algos have become faster and more sophisticated over the years," he added.
Even as algos have gained immense popularity and acceptance in most markets globally, there is also a view that such trading comes with its own share of risks— hence only those with an appetite for sophisticated and complex products should be allowed to use algos. In India, Sebi has barred the use of algos for retail investors. While a few years ago, there was a view that algos could be made accessible to retail investors as well and feedback was sought from market participants, nothing concrete came out of it. A section of market participants is of the view that it disturbs the level-playing field that every investor is entitled to as only one category of investor has been kept out.
2) Leadership lessons from a chess master: Beware overconfidence [Source: Fast Company]
In this article, Alan Trefler, businessman and chess master best known as the chief executive officer (CEO) of Pegasystems, a multinational software company, shares three-phase approach to help anyone make the best decisions. 1) Recognise the patterns: In chess, patterns are important. If you’re going to turn the game to your advantage, you’ve got to see something in an open position that your opponent doesn’t. To understand and recognize patterns, chess players study their competitors’ history and experience. For example, in the Netflix series The Queen’s Gambit, the lead character reads book after familiar book analyzing the games of great grandmasters. Recognizing those patterns will clue you in on the strategic approach you should take.
2) Run candidate moves: Is the strategy you want to apply a winner? Analyzing the situation will help you find out. Take an “if-then” decision-tree approach to ascertain what will happen if you address a pattern with specific moves, and map out a sequence of alternatives to help refine your next move. This will help in imagining all possible ways.
3) Evaluate your overconfidence: Right before you make your move, step back and ask yourself, “Am I missing anything obvious that could totally derail my decision or wipe me out?” It’s really dangerous in chess—and in business—to get so wrapped up in the analytics of your decision that you completely skip over something simple that may trip you up at the end. And while chess is a very transparent game, business—and specifically markets—are opaque. You not only need to analyze what your competition is doing—you need to understand what is happening holistically in the ecosystems that may affect you. Disruption will continue to be the norm for the near future, and markets are evolving quickly, making the business of doing business increasingly more complex. The operational decisions you make now will be more important than ever.
3) NFC vs. UPI: Here’s why payment companies want you to tap and pay [Source: Economic Times]
Since the demonetization and pandemic, usage of Unified Payments Interface (UPI) has surged immensely. Now, smartphones with in-built near-field communication (NFC) chips can connect with debit and credit cards enabled with the short-range wireless technology to make payments of up to Rs5,000 without PIN authorisation. The National Payments Corporation of India (NPCI) has also been popularising its NFC-enabled RuPay cards, which most public-sector banks are disbursing to their customers. So will NFC-enable payments overtake UPI? The technology is backed by all payments-technology firms such as Visa, Mastercard, and RuPay. Many payments firms and private banks are trying to popularize this method, citing that it is easier and faster than UPI, which apparently has multiple steps and a higher rate of payment failures due to patchy mobile network, technical or server errors as well as wrong PIN entry.
UPI’s growth was also facilitated by cashbacks and rewards which have been reduced or even stopped in some cases. But it nevertheless created a habit among customers, and that is tough to change. Like Kunal Shah, founder of credit card bill-payment app, Cred, points out in his tweet, NFC cards may indeed grow in popularity in the years to come. However, he is missing out on a point or two here. Those who use credit cards have continued to do so even during the pandemic. But UPI has converted a new set of customers who used to pay in cash to digital. Among them are affluent customers and also the ones who started using digital modes of payment for the first time.
Talking about the payment solutions in India, innovation would be key. Unlike in the West, in India, consumer behaviour is still evolving when it comes to payments. New innovations and bringing more customers into the fold are likely to help expand the overall digital-payment ecosystem in the country. India is a large retail market and cash is still the preferred mode of transaction. So, there is a lot of scope for growth and new breakthrough technologies like UPI could emerge. But unlike the West or China, the country’s market is likely to be fragmented for a long time, as various segments of the society are in different stages of development. However, the customer stands to benefit from such intense competition, as they will have plenty of choices and will be showered with offers.
4) 4 ways to improve team morale when your staff is burnt out [Source: inc.com]
The last one year has been tough for everyone. Employees have been working round the clock with some bizarre working hours and conditions. This has all resulted in employee burnout. A survey from consulting firm Korn Ferry of over 7,000 American professionals last May showed 73 percent of them were already feeling burned-out--and that was before 10 more months of the pandemic, a winter plagued by election stress and worsening case numbers, and continued uncertainty about when this will actually all be "over." So what can you do to get your team back to their best?
1) Take items off everyone's to-do list: According to a Gallup report, two of the top causes of employee burnout are employees having too much to do and not feeling they have enough time to do it. So lighten their load. This could be a great opportunity for you as a leader to survey what your company is doing and ensure you have reasonable expectations and are working toward the right priorities. 2) Create a "No Questions Asked" day-off policy: It should come as no surprise that employees are taking less time off because of the pandemic. If they aren't sick and they can't take a true vacation, why should they take time off? The answer, of course, is simply because breaks are important for mental health. Some companies are going so far as to force employees to take a vacation.
3) Encourage down time during the workday: Of course, the occasional day off isn't going to fix burnout--especially as employees are working longer hours thanks to remote work. You'll also want to think about restructuring your workdays to give employees more consistent breaks. Research has shown that employees who take breaks have lower burnout, higher job satisfaction, and less of all those physical woes work is giving us these days, like eye strain and back pain. 4) Talk about (even celebrate) failures: One of the key things to think about when it comes to reducing burnout is reducing the feeling of pressure on your team--and the pressure of failure can be one of the worst of all. So work toward creating a culture where failures aren't punished but are understood or even celebrated. All of this isn't about just letting employees slack off without consequence, but helping them understand that when the going gets tough, the weight of the world isn't all on their shoulders.
5) How to lead when you’re not in charge [Source: Fast Company]
Many say leaders are born natural. That might be partially correct as there are many leaders who have made changes to their behavior, mindset, etc. and evolved as successful and inspiring leaders. Most of us believe that “leaders” are people who occupy certain roles that come with some sort of official authority. The CEO is a leader. The president is a leader. But, leadership is actually the act of getting a group of people to do something that is in their best interest, or in the best interest of others, whether or not you have the authority to command those people to do what you want them to do.
Here are few ways in which you can exercise leadership when you’re not in charge. 1) Have the courage to act: Having the courage to take the initiative is often rewarded with respect. Most people are deathly afraid of leading without authority, so when they see it done well, most often they admire it. 2) Keep the work at the center: Harvard professor Ron Heifetz, the father of adaptive leadership, argues that the harder the problem you’re trying to solve, the more people will want to distract themselves from the work at hand. This is why organizations working on hard problems have so much interpersonal politics. By keeping the work at the center, you encourage people to confront the problem, rather than get sucked into gossip and other distractions that keep real work from getting done.
3) Be values-driven and be obvious about it: It’s really hard to argue with someone who is driven by a just and clearly communicated set of values. If you help your colleagues see that your interest in exercising leadership is driven by values, and not by self-interest, it is very hard to say no, unless of course they have conflicting values. 4) Tap into their sense of purpose: Everyone has a purpose. But not everyone knows what theirs is. As a leader, you have an opportunity to help people tap into their own sense of purpose. Do you see an unused talent or expertise inside them? Do you see a new application of an old gift? Can you see a way for them to use themselves in a more meaningful way than they can see right now? Leading when you are not in charge is a delicate balance of influence and diplomacy. It requires a robust tool kit and thoughtful patience.
6) Stewart Investors Asia Pacific Leaders Sustainability Fund [Source: Fidelity]
David Gait, lead manager of the Stewart Investors Asia Pacific Leaders Sustainability Fund, is excited about the prospects for the Asia Pacific region and the opportunities it presents his fund. Much of Asia was ‘first in, first out’ of the pandemic. The fund’s approach to these opportunities, and its sustainability focus are two reasons why Tom Stevenson, investment director at Fidelity, has included it as one of his five fund picks for 2021. Tom caught up with David to learn more about the manager’s approach, and his outlook for the market. The fund looks to leading companies - large to mid-caps, none with a market value less than $1 billion - across the Asia Pacific (excluding Japan) region to deliver long-term capital growth.
Before he invests in a company, he looks for three things. 1) Quality of management: He’s very concerned about entrusting investors’ capital to teams he can’t trust. As such, management is “absolutely essential” to him. He explains: “Most of our job is spent building up a picture of the overall quality of a management team.” 2) Quality of business: He reiterates his long-term perspective: “We don’t want businesses that are going to thrive for three months. We’re looking for the long term - we want to know what happens when things go wrong.” 3) Quality of financials: In his eyes, financials are particularly important in this region: “Things often go wrong in Asia, and the companies that come out stronger the other side are often the ones that have the financial resources.” When asked about when the fund is likeliest to outperform, he says “we set out to thrive in the long run.”
Also key to Gait’s stock picking process is his sustainability focus. Specifically, he likes companies which exhibit characteristics of “social usefulness”. Sustainable, or ‘ESG’ investing, is in vogue right now, but Gait was about 15 years early to the party. Since he started managing the fund in 2005, he’s maintained that sustainability is “key to delivering long-term returns and reducing risk when investing in the region.” Again, a long-term focus is key here. He recognises that many Asian countries are heading along a different development path from other developed economies. In his mind, that’s good and bad: it “throws up a lot of headwinds for companies that are poorly positioned for sustainability challenges but also a lot of tailwinds for companies that are able to deliver progress in terms of sustainability.”
7) The Road To Reality [Source: LinkedIn]
In this article, Bob Hoffman, author of Advertising For Skeptics, writes how marketers and advertisers are living in a fantasy world. The marketing and advertising industry, like every other industry, operates on a set of principles and assumptions. But what if some of the key principles and assumptions are wrong? The author presents the thesis that some of the most widely believed tenets of the industry are wrong, and that there is an alternate way to think about what we do that may be far more productive.
He says that in the marketing and advertising fantasy land, consumers want to “join the conversation” about brands; they want to have “relationships” with the brands, and if they are lucky, they experience “brand love.” Also in their fantasies, consumers want to engage with “content,” they are hungering for “more relevant advertising,” they are attracted to advertising that is “more personalized.” The author’s work in the advertising industry has convinced him of the opposite. He writes, “It seems that most people are perfectly happy having the shallowest of connections to us. They are quite satisfied just to buy our products from time to time and then forget about us. They focus their passions on their lives, not peanut butter, pop tarts, or paper towels.”
If your brand is not available, most of your customers will be quite content to buy another. In fact, a study by Havas Group reported that consumers would not care if 75% of the brands they use disappeared. He then writes how the real world is a harsh and unwelcoming place for marketers. “In the real world, consumers are massively not joining conversations about our brands. They are not committed to having relationships with them. They do not want to “engage with our content,” and are not fascinated by our “brand stories.” They do not consider themselves part of a “community” or “tribe” that has our brand at the center.” Everything that marketing communication people are doing should be analyzed through a hard-nosed assessment of real world consumer behavior, not the rosy lens of traditional brand and marketing thinking.
8) A case study in radical empathy: The Leadership of Zoho CEO Sridhar Vembu [Source: constellationr.com]
In 2020, empathy felt easy to spot. Spotting radical empathy was far more difficult. Enter Sridhar Vembu, CEO and co-founder of Zoho, who has joined the likes of Apple’s Tim Cook and Microsoft’s Satya Nadella as leaders actively investing in radical empathy. Zoho is far from being a “traditional” technology company. In fact, Vembu likely would correct anyone daring to lump Zoho into a traditional mold. Zoho is a “development company,” to quote Vembu, developing technology while developing relationships with customers and communities alike. Unlike with the fast-moving venture-capital-backed technology unicorns of Silicon Valley, the growth of Zoho has been a slow burn, taking its own time in its own way without sacrificing what Vembu openly calls his and the company’s freedom.
For great leaders, being present isn’t just about listening without distraction or a momentary exercise in mindfulness. It is about being ready to be on the receiving end of all good or bad news, to be an equally active participant in the celebration and in the problem-solving. Being present is not about control; in fact, it is the opposite. “I don’t want to be in that command-and-control mindset all the time, because it destroys my own personal freedom,” noted Vembu. “Whenever decisions weigh on you, you start to measure success by how long the line is outside your door. Real power is not being trapped by a power structure that you have built yourself.”
No matter the situation, Vembu is on a perpetual investigation to reach a better state. He realized that talent was a resource in increasingly short supply. Instead of jumping into the wage wars of Silicon Valley, Vembu and Zoho implemented a program to hire bright, skilled, and eager talent without college degrees. Zoho Schools, started as Zoho University, is a classic case of reverse engineering a problem and then rerouting circuits to achieve a brighter output. “If you don’t set out to create talent, there will always be a talent shortage,” Vembu said. Whereas all leaders can and should aspire to be more empathetic, intentionally choosing to understand their organization’s customers, employees, and partners, not every leader is cut out for a life of radical empathy.
9) Why India needs to look east at Taiwan [Source: Livemint]
If there is one country India should be using as a role model for pandemic management, as well as for putting its Make in India initiatives on a stronger foundation, it is Taiwan. On two key counts which have been self-identified by India as key priorities in the decade ahead—building a stellar public health system and ensuring that local factories are embedded in the global supply chain—the east Asian country with a population of 24 million offers a viable model. Alan Hao Yang, a professor at the Institute of East Asian Studies at National Chengchi University and executive director of the Taiwan-Asia Exchange Foundation, observes that the pandemic has given “Taiwan an opportunity to demonstrate its capability to be a responsible member of the international community. Its practices in sharing medical resources and pandemic governance" highlighted the differences between Taiwan and China.
Recently, the Financial Times revealed details of a letter sent to Taiwan’s economy minister from a Joe Biden administration official in which he expressed gratitude for the Taiwan government’s “clear commitment to work with manufacturers in Taiwan" to alleviate the semiconductor shortage. In the midst of a global semiconductor chip shortage for automobiles, Taiwan’s global leadership in the industry gives it yet another reason for prominence. Trade in goods between the US and Taiwan has increased threefold since 2000 and is now close to $150bn. “This is all music to Taipei’s ears. Taiwan has been pursuing a trade deal with the US for at least 15 years," the FT observed. Similarly, India too should be working towards widening contact with Taiwan by exploring a free trade agreement, says former national security adviser Shivshankar Menon, who is a former ambassador to China.
But there are plenty of pitfalls ahead too. For one thing, the PLI schemes are skewed towards large companies, whereas most of the Taiwanese companies that played a critical role in making communist China the world’s largest exporter over the past few decades are small and medium-sized enterprises. India’s unique difficulties with bureaucratic red tape also make it difficult for smaller exporters from Taiwan to use India as a base. The Modi government’s partiality for raising duties on thousands of manufacturing inputs will also prove to be a hurdle for labour-intensive industries, which typically have razor-thin margins. All this needs to be looked after to let Taiwan’s SMEs, besides large companies, come and set up factories in India. Covid has shown once again that the world has much to learn from democracies in Asia such as Korea and Taiwan—and, indeed, India, which has stepped in to manufacture vaccines at scale.
10) Sadie Lincoln is rewriting the fitness story — thoughts on movement, community, risk & vulnerability [Source: richroll.com]
The last one year has been tough. Besides, physical health, mental health is also important to live a good, healthy life. But the pressures of daily life can leave us stressed and exhausted. Sedentary and stiff, our shoulders slump. Our spine rounds and our stance is lopsided. Without corrective action, we can’t function properly. And everything we do, including exercise, only exacerbates the problem. Sadie Lincoln can relate to this. When her career with a global fitness brand almost broke her, she knew something had to change. Sadie and her husband Chris quit their jobs and downsized their lives to pursue an idea most said was bat shit crazy.
Hence was born barre3, a fitness company focused not on weight loss but rather on body positivity and personal empowerment. What started as a personal workout blossomed into a daily practice embraced by millions. Since its 2008 inception, barre3 has grown to more than 140 franchise studios powered by female entrepreneurs, plus an online-workout streaming-subscriber base in 98+ countries.
In this podcast they discuss how Sadie’s love of motion, creativity and teaching informs her particular strain of entrepreneurship and activism. They talk about what it means to not just create a business, but a movement. The importance of serendipity in the world of fitness. And why physical balance also requires spiritual balance. They also explore Sadie’s commitment to empowering women. To cultivating their voices and sharing their stories.
