Week 3, Day 1
"If I had more time, I would have written shorter letter"
- shamelessly stolen from Mark Twain, George Bernard Shaw, Voltaire, Blaise Pascal, Johann Wolfgang von Goethe, Winston Churchill, Pliny the Younger, Cato, Cicero, Bill Clinton, and Benjamin Franklin - Yes, it seems that history has attributed this quote to all of these heroes.
Irrespective who said it, the value of the quote is in the meaning it carries.
One of the things I have been learning is, the importance of being precise. It is not just good etiquette or good manners to be precise (which they are) but being precise, actually increases the chances of success in getting the message across. One of the big learning comes from watching your tapes. One of our group discussion was taped, and the recording was made available to us, to see again. It was quite an experience, to see yourself or others repeating same thing so many times, or seeing someone deviating from the objective and giving a long narrative. The experience of watching yourself was compelling experience.
Saturday Wrap-up
So, the saturday wrap-ups went very smooth, all groups reporting what they learnt - in a snapshot. And you can see, now that - unlike the first week, when every group had its own set of learnings, they are becoming more common in nature. Has to be, we are finally falling in line to HBS style of teaching :)
Getting grounded on finance
Though, an engineer by profession and at heart, I had always prided myself in having more than average knowledge about finance and accounting.
Total BS.
I have no clue about 98% of the things. ROIC, WACC, TIE, RFROI, Beta, - what the hell, where did all these new animals come from.?? On top of this, the questions typically are, What would be your cost of capital, if your WACC is uniformly spread, such that hurdle rates in each of the x business streams are less than your TIE. Now assume, you are a negative beta company, how does that affect on ROE weighted. ????
I am sure, if you give me Dr. Google and a few days, I could answer that question to your satisfaction - but, this and 40 other acronyms need to be learnt, understood in less than 90 minutes. If you have not caught on to the thread, you would be spending 3 hours into the night (like I am doing now) poring over the numbers and their meaning.
On top of it - we have Knut Johannes (pronounced by us as "Yourhighness" - no really thats the real pronunciation) in our team, who will get up to the board (in our living group discussion) and with an utter disgust at us mortals who cannot understand 'basics of numbers' . The only person who can grasp some part of the discussions on finance - is Rafi (yes the double doctorate - laser scientist), who will understand - fill the board up with lots of formulas - and Laurence keeps insisting that he saw E=mc2 somewhere on the charts...
For others like us - its best to sit silently and fantasize of the day, you would be able to learn a fraction of what is being discussed around you.
Ok, so you burnt the night oils, you read up the accounting book - kept in your room, like they keep bible in hotel rooms, in the morning, you brush up again - just make sure, that whatever (however small portion) you have learnt, you remember to answer in time.
Class starts, and Mihir - the wiz professor of finance drops the bombshell.
Finance is more art, less science. While all these numbers are scientific facts, you need an element of "Art" to be able to do the finance. You need intuition, gut feel, and business acumen to plug in the right numbers in the formula. He then goes and describes what he means, and he is right, it is art. But wait a minute... what happened to my half baked learning of the ratios ???
Negotiation
We then had our second round of negotiations role play. Unlike the last round, where the negotiation was single point - money, and with buyer/seller, this was about multi-points and more difficult - because it was internal - two departments - negotiating over allocation of budget. Was nice, the debrief is to happen tomorrow, will be interesting to see, how I fared on it, will keep you folks updated.
The Magician
Things I learnt today
1. Finance is more art, less science.
2. Whats valuation ? Difference between Multiple Analysis and Discounted Cash Flow analysis.
3. The hardest thing to do in your strategy is to define, what you would not do.
"If I had more time, I would have written shorter letter"
- shamelessly stolen from Mark Twain, George Bernard Shaw, Voltaire, Blaise Pascal, Johann Wolfgang von Goethe, Winston Churchill, Pliny the Younger, Cato, Cicero, Bill Clinton, and Benjamin Franklin - Yes, it seems that history has attributed this quote to all of these heroes.
Irrespective who said it, the value of the quote is in the meaning it carries.
One of the things I have been learning is, the importance of being precise. It is not just good etiquette or good manners to be precise (which they are) but being precise, actually increases the chances of success in getting the message across. One of the big learning comes from watching your tapes. One of our group discussion was taped, and the recording was made available to us, to see again. It was quite an experience, to see yourself or others repeating same thing so many times, or seeing someone deviating from the objective and giving a long narrative. The experience of watching yourself was compelling experience.
Saturday Wrap-up
So, the saturday wrap-ups went very smooth, all groups reporting what they learnt - in a snapshot. And you can see, now that - unlike the first week, when every group had its own set of learnings, they are becoming more common in nature. Has to be, we are finally falling in line to HBS style of teaching :)
Getting grounded on finance
Though, an engineer by profession and at heart, I had always prided myself in having more than average knowledge about finance and accounting.
Total BS.
I have no clue about 98% of the things. ROIC, WACC, TIE, RFROI, Beta, - what the hell, where did all these new animals come from.?? On top of this, the questions typically are, What would be your cost of capital, if your WACC is uniformly spread, such that hurdle rates in each of the x business streams are less than your TIE. Now assume, you are a negative beta company, how does that affect on ROE weighted. ????
I am sure, if you give me Dr. Google and a few days, I could answer that question to your satisfaction - but, this and 40 other acronyms need to be learnt, understood in less than 90 minutes. If you have not caught on to the thread, you would be spending 3 hours into the night (like I am doing now) poring over the numbers and their meaning.
On top of it - we have Knut Johannes (pronounced by us as "Yourhighness" - no really thats the real pronunciation) in our team, who will get up to the board (in our living group discussion) and with an utter disgust at us mortals who cannot understand 'basics of numbers' . The only person who can grasp some part of the discussions on finance - is Rafi (yes the double doctorate - laser scientist), who will understand - fill the board up with lots of formulas - and Laurence keeps insisting that he saw E=mc2 somewhere on the charts...
For others like us - its best to sit silently and fantasize of the day, you would be able to learn a fraction of what is being discussed around you.
Ok, so you burnt the night oils, you read up the accounting book - kept in your room, like they keep bible in hotel rooms, in the morning, you brush up again - just make sure, that whatever (however small portion) you have learnt, you remember to answer in time.
Class starts, and Mihir - the wiz professor of finance drops the bombshell.
Finance is more art, less science. While all these numbers are scientific facts, you need an element of "Art" to be able to do the finance. You need intuition, gut feel, and business acumen to plug in the right numbers in the formula. He then goes and describes what he means, and he is right, it is art. But wait a minute... what happened to my half baked learning of the ratios ???
Negotiation
We then had our second round of negotiations role play. Unlike the last round, where the negotiation was single point - money, and with buyer/seller, this was about multi-points and more difficult - because it was internal - two departments - negotiating over allocation of budget. Was nice, the debrief is to happen tomorrow, will be interesting to see, how I fared on it, will keep you folks updated.
The Magician
- An executive coach who has garnered plaudits from numerous corporate leaders
- Hosted by celebrities such as Larry King, Woody Allen, and David Letterman
- Entertained more than 12 state heads, including last 6 US presidents.
- Member of MENSA
- 5 times National Piano guild winner
- Business faculty for Fortune 100 companies
- Ph.D. in social psychology,
- Atleast a dozen graduation degrees
- Policeman
- Distinguished Shooter
- Singer-songwriter who plays five instruments.
- Acted in 11 Movies - including Pretty Woman
- TV actor and a stuntman.
- He holds a seventh-degree black belt in karate
- Board-certified hypnotherapist,
- Scuba instructor,
- Special-effects pyrotechnics operator,
- Licensed building contractor,
- Flight instructor for airplanes and helicopters.
- ... believe me, the list is not done, do your own google, you will see what I mean.
Things I learnt today
1. Finance is more art, less science.
2. Whats valuation ? Difference between Multiple Analysis and Discounted Cash Flow analysis.
3. The hardest thing to do in your strategy is to define, what you would not do.
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