First, one would say hit-and-runs must be punished severely for it shows utter disregard to the life of a fellow human being. But if you drive on Indian roads, you very well know the fate that awaits you should you stop to check on the victim. A mob quickly gathers and you are the target of all their pent up frustration. In several cases, mob assaults have caused deaths too. Can one really blame the driver for fleeing the crime scene?

On the question of negligent and drunk driving, there is no dispute that such offenders must be severely punished. But the most stringent penalty for such an offence is probably to revoke their driver’s license and levy a huge monetary fine, and possibly a few days in prison. Were the offence of rash/drunk driving committed in the day during heavy traffic, it could be argued that the driver put lives of fellow commuters at risk, and a more stringent penalty is required – possibly charging with intent to murder or something like that. But during the night, when the roads are deserted, is rash driving so bad? It is understandable that the victims and their survivors, and even the general public, will be in no mood to consider this. A life has been lost, and that implies the offender must be tried for murder.

Of course, the law makes a difference between murder and manslaughter. Murder implies premeditated killing whereas manslaughter denotes no prior intent. But even a manslaughter charge is harsh from the offenders’ perspective. You are returning from a late-night party with a nice buzz when you see a deserted patch of road and decide to let it go. The worst you expect is to crash against the pavement. Imagine your shock when you hit the pavement only to realize you have just crushed three people sleeping there.

My point is that harsh punishments in individual cases won’t change anything beyond providing emotional relief to the victims and survivors. The underlying risk of recurrence remains. The solution must be to create a strong disincentive against rash and drunk driving. And there must be an equally strong disincentive against squatting/occupying pavements and roadsides. I realize both are easier said than done, but the risks are worrisome if not addressed. If you drive on a regular basis, you know the feeling when you watch pedestrians crossing the road with no regard to the oncoming traffic.

Same goes for DTH ads that purpotedly claim to have better quality. I think Airtel has Saif watching a football game – half the screen is blurred to represent regular cable and other is bright to represent Airtel signal!! I feel insulted watching these ads. The BIG TV ad is much better. A wife is talking about the husband’s excitement at purchasing an LCD TV followed by his disappointment when he saw much better picture quality at his friend’s place. Apparently, BIG TV makes the difference, but in doing so the message conveyed is also that you only need such a connection if you have an LCD TV. Chances are, if you have an LCD TV, you are on DTH already and the switching costs are not negligible.

Sun DTH has found the right formula in my mind – the price. When one has to switch from a Rs. 300/mo cable connection, the biggest resistance is in the cost. Yes, there is a segment that wouldnt mind paying a premium for better quality, but I doubt if there is such a perceptible difference between the providers there. Tata is even smarter. They only advertise Tata SKY+ which is the premium offering that comes with a DVR. The ads are exciting but most people would balk at the high price. Oh no problem, sir, we have a cheaper option without the DVR. Bingo!

It is, but natural, that FM players are vying to attract the most number of listeners during rush hours so they can jack up advertising rates. Which is why they have their marquee RJs hosting shows, and extensive brand building to raise their profile. But such differentiation ceases to matter when everyone follows the same strategy. Trying to get better RJs or changing the tone of these shows can hardly be termed innovation. This is a typical example of trying to compete with what’s called “Red Ocean Strategy”.

When markets get competitive, one should step back and assess the situation afresh. What pulls listeners to an FM station? In my mind, the top three factors are: good music, more music/fewer ads, and interesting/funny RJs. The first and third are pretty much standard so the way to break out is the second option. (Am not saying all RJs are good, just that they are equally bad.)

The solution is simple. Eliminate RJs. That will allow more time for ads because time that was earlier split three-ways (music, RJ and ads) is now split two-ways. You may choose to slip in an occasional interview to keep listeners curious. Otherwise, listening to one star or the other everyday has become a boring thing. This is “Blue Ocean Strategy”. The only potential hiccup here is if FMs have to pay royalties based on the number of times a song is played, in which case the expense will shoot up. Can that be offset by the savings in RJs’ pay is something that needs to be worked out.

I must confess this is not my original thought. Jack FM in Los Angeles plays rock 24×7, has no RJs, doesn’t take any requests, but has some self-deprecating and condescending recorded messages that play between songs. (“Broadcasting from a dumpy little building in beautiful downtown Culver City”), and is a popular station out there.

Tata has managed to steal the thunder from Airtel and Reliance by adding more subscribers for the second month in a row – and by a wide margin too. It introduced pay-per-call on Indicom to let users talk as much as they want by paying a fixed price. Then, of course, DoCoMo let users pay per-second for calls and per-character for SMS. Has it paid a price in the process? TRAI is making noises about having all players move to per-second billing, and expectedly, the operators are upset. I think they should celebrate.

The data on the left is from Bharti’s Quarterly report. The average tariff is almost 1p/sec, which is what the new scheme offers too. The right side shows my calculations to determine revenue loss by offering per-second billing.

I am assuming the average call duration is 120 sec and that 30 secs are wasted every call – the call is terminated at 1 min 30 sec, but we get charged for 2 min. In this scenario, ARPU lost is about 23%, and that is a big drop.

However, I think people who opt for this scheme, or even subscribers to whom the scheme is made available (should other operators follow suit), will make additional calls. For two reasons. First, of course, is the genuine need to make those short calls to let someone know you are late etc. Right now, one might hesitate because the 5 second call will end up costing you 60p.

Second, and more interesting, is the need to make short calls so you can “realize” the savings. At least initially, when one has per-second billing and everyone else is on per-minute tariff. The temptation to “demonstrate” savings should not be undermined. In a group, if one has to make a call, it is the per-second guy that will go first to show everyone that he pays only for what he uses. I mean there is no point in going for per-second billing and then not reaping its benefits. So you make a 30-sec call, show everyone that only 30p has been deducted, and feel happy that you saved 30p.

Assuming these additional calls last an average of 15 seconds, calculating the # of new calls to make up for lost ARPU comes to about 14 calls per day. Should such a call last 30 sec, it only requires an addition 7 calls a day. I think that’s a small enough number. Also, notice that the difference in the ARPUs without considering additional usage is about Rs. 60, so I doubt if people are desperate to save that amount. Rather, most consumers would like to make sure the Rs. 300 they spend every month goes the extra mile. So my take is that usage will drastically increase with ARPUs increasingly slightly or staying constant.

The price-quality association is the least malign of the tricks. There are much more subtle ones out there. If you are looking to subscribe for the WSJ, you get three options: online only, print only and online + print. The pricing is such that the price for online + print and print are virtually the same. One would think its a really dumb move that would kill its print subscriptions, but apparently, this has increased the total number of subscriptions – of course, with most people going for the online + print deal.

One also routinely seen in magazine offers at almost 50% less than the cover price if you subscribe for a year. They are essentially hoping that the temptation to save so much money almost always overpowers any questions on the utility of such a subscription. And it does work in certain segments.

And, of course, if you are part of middle-class India, you know how our system of haggling works. The vendor almost always quotes a price that is three times what he is expecting. As a buyer, you are sort of aware that he is overcharging, but you dont know by how much. So you start with a price that is 1/2 what you are really willing to pay. Often the deal will conclude with you paying a little less that your max price and you will walk away satisfied. The vendor would have made a neat margin and is happy too. But as buyers, we will never know exactly how much we overpaid.

In some cases, pricing is simply gaming buyers, but in others, it is directly related to the value perceived by the buyer. Couple of days back, a bridge collapsed on the railway line in Mumbai thus disrupting and delaying all long-distance rail traffic. Airlines promptly jacked up their fares with a one-way Chennai-Mumbai ticket starting at 12K!! Clearly, anyone desperate enough to reach Mumbai will pay that.

P.S: Having got a return trip for half that fare, I think I should stop complaining now:))

inThe magnitude of the fare sunk in only when I saw the credit card statement. 5K is not a small amount. Of course, it’s hard to deny that the deal was a sweet one “under the circumstances”. So I set about analyzing what the circumstances were. First, how badly did I want to be in Chennai? My mom had gone there a week ago and would be there during Diwali. Most of my extended family lives there, and I had not visited them for more than a year. Neither did I have any alternate plans of celebrating Diwali in Mumbai. So, yes, I wanted to go badly. But I think there is another factor that tipped my decision in favor of going.

I came across the expensive fares first. I saw 10K, thought the airlines were crazy, and decided it was best to spend some money on beer and the weekend in bed. But when I saw a fare half that number, the temptation to save 5K was overpowering. Would I have made the trip had the fare been 5K uniformly across airlines? Or even if the going fare was, say 7K, and I was getting it for 5K. Maybe not. The incentive to save 2K is not as irresistible. To give you an example, I shopped at Pantaloons this weekend. At checkout, the sales guy asked me to enrol into their rewards program. I had to pay Rs. 100 to get into the club, and would be immediately rewarded with a gift voucher for Rs. 200. Without hesitation, I declined the offer.

What’s my point? I am trying to analyze the trip financially. Did I spend 5K – a loss, save 5K – profit, or spent 5K to save 5K – net net? (In the second case, I think I definitely saved Rs. 100 by not going for the card.)

To exist, businesses must deliver value to its customers – this is different from the debate on creating value for shareholders vs stakeholders. Preferably, value must be tangible, but in some cases, it is notional. The industry that best demonstrates value creation is IT. Just imagine the time and effort wasted on mundane tasks everyday if we didn’t have Windows and Microsoft Office.

Of course, value creation is not as obvious in all cases. Entertainment and television, for example. Some people would argue that television is turning us into morons and is actually value destroying. Yet, the industry is exploding. This is a case of notional value, where people are ready to lap up any and every form of entertainment. It can be risky to bet on such models because they fundamentally rely on exploiting consumer preferences. Very similar to what the fashion industry does. The value created is not by clothing people but rather by making people feel that their clothes are better than others. This is also the business model of our local quack, palmist and other fortune tellers – they all make the consumer feel better.

The ability to deliver notional value on top of real value is the holy grail of a successful business. Which means, not only is the product good, but you also take pride in ownership. The ipod and iphone are perfect examples. World-class products enhanced by the “Apple” brand. Even here, the relative magnitude of the tangible and notional values matter. So long as the tangible value is much larger than the notional one, the business is stable. Microsoft, for example, probably has a negative notional value, but is yet a profitable business because it offers unmatched tangible value. On the other hand, FMCG products do have some tangible value, but rely heavy on notional value. I doubt if any of us can differentiate between two shampoos in a blind test.

The simplest way to check whether a business adds value is to ask if it helps people do stuff “faster, better and cheaper”. Ideally, all three aspects must be addressed but sometimes addressing even two is okay.

The thought occurred to me when I saw the ad for imint on the back of a bus. It is a rewards system where you earn points every time you spend, which can be later redeemed for gifts or vouchers. Nothing radical about the concept itself. Credit cards have been doing this for a long time now. But here’s what puzzled me. Is there an opportunity for a third-party to make a business out of it?

I dont know for a fact how imint works, but my guess is they have consolidated the rewards system of some retailers and cards so that the customer is able to get points for all transactions in a single “currency”. So no more 100 points with ICICI, 250 points with HP, 50 points with Jet with none of them sufficient by themselves to do anything. Now, we get 450 imint points that is good enough to get a mug or something.

I guess imint adds some value thru the economies of scale it gets by consolidating the rewards system. So that explains why ICICI, HP and Air India have hopped on. Their points now make some sense to customers. But how would imint get new customers? For instance, why would HDFC or Jet sign on? Its destructive to both HDFC and ICICI because their customers wont see any difference in using either card, thus resulting in mutual cannibalization. In fact, I wont be surprised if ICICI has an deal that prevents imint from signing on competing financial institutions.

So how can imint grow? Well, by encouraging customers to spend more. That I think, personally, is a friggin stupid model to run a business.

Although I dont have first-hand experience, I think there was a time when the front page determined newspaper sales. Especially during high profile murder trials or controversies, people would buy the paper after glancing at the headlines. Also shown in innumerable movies where paperboys at busy signals are carrying tabloids screaming with the latest headlines.

Well, all that would be history soon. Our newspapers have realized how precious these front pages are – literally. The front page has dumped news in favor of ads. I believe every single major newspaper now comes a “wrapper” with ads on both the front and back. The trend started with tabloids such as Mid day and Mumbai mirror but even TOI and HT have adopted this. I wonder how long before our dailies go the magazine way where ads dominate and content has a token presence.

Here’s the point: It’s not those few minutes that people are after. It is the resultant delay that could be in hours if those few minutes are not well utilized.

Let me explain. We live in India where power laws surface even in the most mundane of instances.“Power laws” is a term used to indicate a non-linear, usually exponential, relationship between two variables. Let’s say it takes you an hour to drive from home to work. If you start at 7, you reach at 8, start at 8, you reach at 9 and so on. If you plot your start time on X axis and arrival time on Y axis, you will see a diagonal straight line that indicates a linear relationship. But let’s say, if you start at 7, it takes you an hour, but if you leave at 8, it takes an hour and 30 minutes. At 9, it takes two hours and so on. Now, if you plot these, you will get an exponential curve. The point being, if you are 5 minutes late in getting off the plane, it might take you an hour longer to reach your home or workplace.

What does a typical domestic traveler do on arrival? Pick up the baggage and head for the exit. Now, in the US and other countries, there is a clearly marked lane with several cabs waiting. One simply gets into a cab and zips off. Here, though, we have the prepaid taxi counter – a monopoly that cares a damn for travelers. They are in no hurry to get people out fast and are often seen engaged in shouting contests with cab drivers. So if you are late by even a minute, you see 10 people ahead of you in the line at the counter. That also means 10 opportunities for things to go wrong. Someone does know the exact name of the locality so the guy at the counter denies a cab and an argument ensues. Someone isnt carrying change – another argument. The 2 minute delay in getting off the aircraft has already snowballed into a 20 minute delay in getting out of the airport.

There’s more. The roads leading out of the airport arent broad enough so the traffic is typically crawling. During peak hours, traffic starts piling up and a smart cabbie tries to save 30 seconds by cutting across a lane and creates a mess that takes 30 minutes to clear. Your misery just keeps compounding…

Am not saying that the precious headstart of a minute or two will ensure you will reach your destination in time. There will be several other traps along the way that are impossible to avoid. Just that getting out of the airport quickly is the only aspect under your control and it would seem foolish not to use it. I am willing to bet that the moment our airport facilities and services ensure that we can get out of the airport without hassles, people will be much more relaxed. In fact, I think we are much more relaxed when arriving at new Blr or Hyd airports that are much less congested.