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This year, unlike before, I have decided to take a few new year resolutions and test my tenacity for sticking to them. They are quite modest but if I do succeed in following them I hope to develop a strong discipline and to experience a sense of achievement. These resolutions will be added as a separate page on my blog so that they are not lost in time and space. It is my hope that I will be able to take a quarterly check and monitor my progress. Any bit of encouragement will surely help. So here they are:

1. Practice my Pranayam, Kriya, and Meditation daily – I consider them very important to achieve a calm and serene mind and I am sure regular practice will help me deal with worldly issues in the best possible way.
2. Read at least one book a month – I am not talking about fiction here. There are so many good books out there that even a life time is less to accumulate all the knowledge. Reading good books does help broaden one’s mind and build different perspectives and that is what I seek to achieve. This will also ensure that my education continues even after my MBA is complete.
3. Blog regularly – Blogging has become a great way to share ideas and make good friends all over the world. I wish to build a platform through which I can share meaningful thoughts and learn from others in the process.
4. Start investing in the stock market with a disciplined approach – Soon my formal MBA will end and I will have no reason to avoid money management, one of them through building a robust long term stock portfolio. I have all the necessary tools and the knowledge so I will make the best use of that to invest intelligently. There will soon be a stock tracker on my site that you will see with my positions and related gains or losses.
5. Take photos more often and build a flickr portfolio – There are a few things that I really enjoy one of them being photography. This year I resolve to take more photographs and build a small portfolio of my photographs on flickr to share with all of you.
6. Do “Seva” (service) – As a citizen of this world, I have some duties towards my community. Hence I will try to find opportunities to take up some activities that will help me connect with people and help them in whatever way I can.
7. Use my time productively – 24hrs in a day should be well spent. My assessment of the previous years begs to remind me that I do waste a considerable amount of time doing things that are merely recreational with no productive outcome. I need to minimize that.

So, as you can see, my resolutions are quite simple and nothing extraordinarily out-of-the-box. They also have nothing to do with work or career. The above list consists of those items that I need to do anyways but I always find an excuse of not doing. But these are also the things that I really consider enriching and fulfilling. Surely, I have to do good in my work, build a great career, and I will definitely work towards that. But doing so is just an order qualifier. To be in control and being able to build a discipline to follow the above seven items will constitute, for me, an order winner.

We, as in SDA graduates at Goizueta, have studied “negotiations” and “auctions” to a certain degree. Some of us have even had advanced training in negotiations. Now Harvard professor Guhan Subramanian has come up with Negotiauctions. According to him there is a strong interplay between negotiations and auctions in real life situations. I certainly felt the truth in his statement, based on my experience in the various assignments during the course duration, and am looking forward to get my hands on the book during my MBA so that I have the time to read and ponder over his thoughts.

Words from our economics professor Ray Hill. He is correct in saying that and I also believe that everyone in business (not just MBAs) should know what inflation is and how to calculate the rate of inflation.

What is Inflation? Per Wikipedia, the definition is – inflation is a rise in the general level of prices of goods and services in an economy over a period of time. So far so good. We all understand this basic concept very well.

Now, how is the rate of inflation calculated? What measures should one use to calculate the rate?  Basically, there are some other measures (or indices) that should be known to you before you decide to calculate the rate. First is CPI or Consumer Price Index – an estimate of average price for goods and services purchased by households. Second is GDP deflator – a measure of level of prices of goods and services that are produced domestically. Third is PCEPI or Personal Consumption Expenditures Price Index – derived from the largest component of the GDP (personal consumption) and measures the change in prices of goods and services consumed by individuals. I will not go into the details of what each of these are and how they differ because lots of literature is already available on the internet.

Calculation of the rate of inflation is very simple indeed.

Rate of inflation (between time period t and T, T>t) = (Value of the index at time T)/(Value of Index at time t) – 1.0

For e.g. – Between December 2006 and 2007, the inflation rate was 4.08% (based on CPI)

But this is where the fun begins. Using these concepts how do you find out what is the real price of a good based on prices in a certain year in the past? Say Coca Cola, 6 pack 12Oz., used to cost 50 cents in 1974 and $1.50 in 2004 (illustrative figures). This $1.50 is the Nominal price of Coca Cola. What is the real price in 1974 dollars? Say the rate of inflation between these time period is 283% (2.83) (this is actually true). Then,

Real price (in 1974 dollars) = Price in 2004/Rate of inflation = 1.5/2.83 = 53 cents. Huh. Not bad is it!

There is another question that begs answering – What index should one use to calculate inflation rate? CPI is measured using a fixed basket..not a good idea because a typical household’s basket of goods purchased changes over time, new products are introduced, and quality of goods changed (for e.g computers, cars…). There have been some changes in the ‘algorithm’ used but still it tends to have an upward bias in the calculation. GDP deflator helps a little bit because it does not rely on a fixed basket but the actual consumption/expenditure patterns of individuals in a given year. This tends to eliminate the upward bias, but not by much.

Some products, specifically food and energy, tend to be affected by supply shocks and the price change may be temporary (we know about the oil prices, right?). So including these components in calculating true inflation may be misleading. If these are eliminated we may be able to see the real picture. This is where Core Inflation, calculated using PCEPI, comes into picture. In fact, Fed nowadays uses this measure to calculate inflation and take monetary decisions.

Note that inflation can be calculated for specific set of assets such as commodities, services, and wages.These set of values are just subsets of the net inflation but the rules of calculations remain the same.

Some important direct links:

CPI (unadjusted) Data Download

GDP Deflator Data Download

PCEPI (Less food and energy) Data Download

News Flash – September inflation data indicated that consumer prices declined 1.3% during the prior 12 months and that core annual inflation, which excludes volatile food and energy prices, rose just 1.5% — well within the Federal Reserve’s comfort range of between 1%-2%.

Hope you now understand what this means…

As promised earlier, here is my first guide. These guides are being prepared as I learn a few new concepts and methodologies during the course of my MBA (during the summer break).

I have also given a name to the series – Cow’s guide to <Subject>…. If you ask me, I may tell you why I have named it such. But for now, just consider it unique. These guides are intended to be a beginner’s reference and should be used as a casual read to get basic understanding of the concepts discussed.

So, here is the first guide – Cow’s guide to Conjoint Analysis. In my document Conjoint Analysis is referred to as applied in Market Research. Conjoint Analysis is extensively used statistical technique to quantify customer preferences for your potential/existing product based on its attributes and values. Attributes are nothing but features of your product and values are the various types (levels) within each attribute. You will understand better once you read my guide.

Conjoint Analysis is a powerful method and is applied extensively in Marketing Strategy, New Product Development, Pricing Strategies, and even Sales Forecasting.

I would much appreciate if you can provide me your feedback on the guide. You can comment on my structure, level of detail, or even the use of language.

Download link –> Cow’s guide to Conjoint Analysis

One of the intentions of this blog was to write about new concepts that I learn while pursuing my MBA. Now, understand that even though I may be writing about specific subjects/topics, I am not a master in them. I am a learner who hopes to build an applicable skill. The articles will be very basic but it will definitely help lay foundations for exploration. I will try to get my articles vetted by my professors and business contacts, as and where needed and possible.

So here is a list of items that I wish to learn and write about in the forthcoming few weeks:

• Conjoint Analysis
• Options Primer (repeat .. Primer)
• How to read a 10K document
• Strategic M&A behavior
• Experience Curve
• Interest Rate and its implications

I may continue to add and cross items from this list as the posts are made. Also note that there may be other random posts other than the ones listed above. If there is any item you wish to see here, please leave a comment.

Situation

MBA schools are receiving a lot of flak lately thanks to the recession. But are there any ways by which this situation can be improved. Why haven’t any schools come back in retaliation to what is being said. Do they know that this negative propaganda will have no effect whatsoever on their attractiveness? It is yet another storm that will pass.

What happens

Some schools meanwhile will introduce some new program, new curriculum, or a new subject that will promise to expose the real world implications of their decisions and analysis and make them employee (I should say ‘World’) friendly. Once students take that class they will have only one thing to say – I have no idea what was taught. The material was great, the profs exemplary, but there is a void in what we did and what we could have learnt.

My opinion

I have been part of a b-school that has changed its curriculum (slightly) recently to accommodate more real world learning and applying multi-disciplinary skills. I cannot doubt the efficacy of the idea but I am still not completely satisfied in my experience. Here are some of my thoughts of what I think an ‘up’coming b-school should do to make itself not only well known among practitioners but also make sure that their students are learning (getting the real education vis-à-vis getting a job and making money:

1. Hire fewer students – But really good students. I have spoken to lot of my friends in my school and other schools where they complain about lost opportunities and not enough jobs. By looking at their performance in school, in previous jobs it seems quite evident that they are missing the ‘thing’ that big employers are looking for. All that bought them to the school was a great GMAT score, some nice referrals, and doctored application essays. It is important for schools to practice what they preach – think long term. Hire those that can learn, can deliver and not just provide hollow diversity.

2. Make 80 hours of community service mandatory – Yes, I mean it. Students who have lived the community life are the ones who have a good chance of identifying with the situation outside. Why do I say this? Because I have observed it. These folks meet people with much different outlook, perspective, and disposition to life and problems. Those who learn and inculcate from such experiences are the ones who really perform.

3. One real world project per semester – Absolutely mandatory. There are lots of companies working on small, not-so-important projects throughout the year where an MBA student can be placed for a semester. The end product of that course should be a detailed report on how the student performed, an executive summary of the job, and a presentation of the deliverables. Such opportunities give a practical experience to each student in  networking, developing real world experience in the field they have never worked in, and presentation. And the employers get their work done for free and possibly their next rock star recruit.

4. Incentivize students – Have awards for blogging, for community work, for going beyond the call of duty, for making a difference to someone’s life, for highest score in each subject, and so on… These awards will force us to work towards a goal, towards reaching heights that we lazily forget about in the daily grill of the b-school experience.’

5. Report on contribution to B-School – How many of you have answered the essay question – What do you bring to the table? How will you contribute towards your school’s community? – And how many of you have gone beyond the obvious contributions (diversity, enthusiastic team member, radical outlook, different perspective, and etc.) and described the fantastic ways (community leader, organizing events, and etc.) you will go about contributing. Its time baby. Now when you graduate you will need to write a report of your contributions, match it up with your essay and provide necessary explanations. If this is done, people will be honest, will be pushed to give their best to the school and just have something to carry back.

In the interest of keeping the size of this post just this big, I will start a new post when I get the next idea.