Lessons from Rahul Dravid 2

from Economic Times 11th March 2012.


6 Traits for Everyone at Workplace


 K Sudarshan Managing Partner, EMA Partners International, India 

• Team Man Dravid, who did everything asked of him, was the quintessential team man.
•  Takeaway If you have team’s interests, your peers will respect you for what you are and you will grow with your team.
• Talent Minus Attitude Dravid, superbly talented, never had an attitude. That’s why perhaps he had such a long and illustrious career. 
• Takeaway Talent doesn’t justify brash behaviour with colleagues and/or customers. Without an attitude you are valuable for longer.
• Personal Values Dravid’s integrity and behaviour, on and off the field, were irreproachable.
• Takeaway Great performers lose their way because of personal failings. Ethics and values are a must for longterm success. 
• Work Ethic Dravid gave 100% every time he stepped on the field. He did his homework.
• Takeaway Want to excel? Work hard at being ready. Motivate yourself.
• Patience Patience and temperament are the greatest allies for a Test match batsman and Dravid had them in abundance. 
• Takeaway Getting swayed by quarterly results is a rash shot. Don’t sacrifice longterm goals for quarter-on-quarter glory.
• Conformist Dravid played by the rules. That worked for him as a player, but not as a leader. He probably lacked the X factor. 
• Takeaway When you pick corporate leaders, look beyond talent and performance. A magnificent performer, a great team man, a fine human being may not make a good leader. 

Lessons from Rahul Dravid

From Economic Times 11th March 2012

He’s Retired... Lessons from Rahul Dravid

Two corporate headhunters deconstruct a great cricketing career for executives

3 Learnings for 3 Levels R Suresh Managing Director, Stanton Chase India 

1 For Entry-Level Executives: Rahul Dravid is more technique than talent. He is a disciplinarian who came first to any practice session and left last, and didn’t miss coaching. Dravid idolised Sunil Gavaskar, another master technician. Dravid in his earliest days imbibed from his coach and his idol that patience, staying at the wicket and a work-horse like approach was the sure-shot way to sustain initial success. The lessons for entry-level corporate executives are clear: it takes a lot of learning and honing the ‘fundamentals’ of the domain, for an expert to emerge. Dravid also stands for fitness and multi-skilling. They make you more valuable to your employer. A junior manager should think, Dravid kept wickets for India; he needn’t have developed that skill. 

2 For Middle-management: Early successes spurred Dravid to greater dedication. He went to master newer abilities — the square cut of a turning ball, the glance off the pads of an inswinging delivery and the pull shot along the ground. His success made him more grounded. He adapted to ODIs. But still maintained an unassuming profile. He never minded playing second-fiddle in any long partnership. The takeaways to corporate managers in the middle to senior levels are plenty. Build on pilot success, each milestone only spells a higher bar for the next, no celebration, in fact no declaration of successes even. And above all partnerships, peer-group respect and selflessness. Dravid put his team first always, but he still ended up as the second-highest run-getter of all times.

 3 For Leadership Executives: Dravid failed as a captain. The lowest point was the India’s ignominious early exit from the 2007 World Cup. He was sacked as a captain, but he still wrote a letter to BCCI saying he didn’t want to continue. He was removed as a captain by his IPL team owner Vijay Mallya. Dravid continued to perform as a player. He showed grit and determination not to let his team, its owners and the reputation down. He wasn’t made to be an all-guns-blazing leader his successor Dhoni turned out be. The lesson for corporate leaders? No matter how well prepared and competent you are, circumstances may give you a rough time. It is the ability to rebound and flourish again that determines the ultimate winner. 

Stanford University - Don't be carried away by looks!!!!!!!!!!!!

True Story A lady in a faded gingham dress and her husband, dressed in a homespun threadbare suit, stepped off the train in Boston and walked timidly without an appointment into the Harvard University President's outer office. The secretary could tell in a moment that such backwoods, country hicks had no business at Harvard and probably didn't even deserve to be in Cambridge. She frowned. "We want to see the President," the man said softly. "He'll be busy all day," the secretary snapped. "We'll wait," the lady replied. For hours, the secretary ignored them, hoping that the couple would finally become discouraged and go away. They didn't and the secretary grew frustrated and finally decided to disturb the President, even though it was a chore she always regretted. "Maybe if they just see you for a few minutes, they'll leave," she told him. He sighed in exasperation and nodded. Someone of his importance obviously didn't have the time to spend with them, but he detested gingham dresses and homespun suits cluttering up his outer office. The President, stern-faced with dignity, strutted toward the couple. The lady told him, "We had a son who attended Harvard for one year. He loved Harvard. He was happy here. But about a year ago, he was accidentally killed. And my husband and I would like to erect a memorial to him, somewhere on campus." The President wasn't touched, he was shocked. "Madam," he said gruffly. "We can't put up a statue for every person who attended Harvard and died. If we did, this place would look like a cemetery." "Oh, no," the lady explained quickly. "We don't want to erect a statue. We thought we would like to give a building to Harvard." The president rolled his eyes. He glanced at the gingham dress and homespun suit, then exclaimed, "A building! Do you have any earthly idea how much a building costs? We have over seven and a half million dollars in the physical plant at Harvard." For a moment the lady was silent. The president was pleased. He could get rid of them now. And the lady turned to her husband and said quietly, "Is that all it costs to start a university? Why don't we just start our own?" Her husband nodded. The President's face wilted in confusion and bewilderment. And Mr. and Mrs. Leland Stanford walked away, traveling to Palo Alto, California where they established the university that bears their name, a memorial to a son that Harvard no longer cared about. You can easily judge the character of others by how they treat those who can do nothing for them or to them. Malcolm Forbes

Learning from E Sreedharan career

ET on Sunday, 18th  December 2011, takes a close look at the career of the near-legendary and soon-to-retire Delhi Metro chief, E Sreedharan, and breaks down that fascinating story into learnings for everyone, whether you are a CEO, a manager or a policymaker

:: Malini Goyal 

    It took them 190 km and 14 years to muster the courage to let him go. And yet, two weeks before E Sreedharan quits as managing director, Delhi Metro Rail Corporation (DMRC), their trepidation is palpable. The question is not whether Phase III of the Delhi Metro will be completed by its deadline — 2016. The question is whether it will be done the Sreedharan way. Will his legacy continue after he is no longer at the steering wheel?
The man himself is unruffled. Sreedharan has full faith in his team to carry forward Delhi Metro’s sterling tradition. After all, the credit for the project’s success must go to the 7,000 employees who work hard everyday, he says. 
    This is Sreedharan the leader, who has evolved a system that he believes, can do without him. This is Sreedharan the man, who is self-effacing in his humility and can’t be bothered with glory.
    Yet, in the past decade fame chased him. As the Delhi Metro rolled out track after track with speed, precision and transparency, the ‘Metroman’ became the icon for many Indians. 
    Along the way, there were several attempts to deconstruct his success. Every little idiosyncrasy was analysed, each quote repeated several times over. Fans tried to build his work philosophy with scraps of information about how he ran the Delhi Metro. But very few succeeded in inculcating a bit of the Sreedharan style in their lives. So as Sreedharan prepares for his time off, ET on Sundaydecided to revisit the decade and a half that made him an icon. Only this time, we have culled the learnings and formatted them to fit into your role in life. This is the list of lessons with tips from the legend, customised for YOU.
IF YOU ARE A POLICY MAKER Redefine the Context Benchmark yourself against the prevalent system and you’ll land with moderate success. It will not measure up to the grandeur of a Delhi Metro. Such things demand a vision not limited by convention or expectations. People would have been happy if the first phase of the metro was completed by the deadline — 2005. But Sreedharan raised the bar. He told his team, Delhites couldn’t wait for 10 years for a Metro. The deadline was shortened by three years and met. Focus on Goals Not Politics Shore up your perseverance and prepare for maximum resistance, especially by political expediencies. “I don’t know why some bureaucrats are not able to function. They should have the courage to stand up to their convictions and take decisions and not leave everything to the politicians,” says Sreedharan. He followed this principle throughout his career.
    One such occasion was as the head of the Konkan Railway project in the 1990s. They were years of flux as Goa saw chief ministers change four times between 1993 and 1994. Every change brought a fresh group of lobbyists into the spotlight. “Sreedharan was a rock who was determined to get the project completed,” recalls PV Jayakrishnan who at the time worked as the chief secretary, Goa.
    Sreedharan shares another anecdote. In the early years of his DMRC stint, he was to appoint international consultant for the project. His team chose the Japanese on the basis of their bids. But the then railway minister insisted on the Germans as they had lobbied hard for the position.
    “I refused to give in. And refused to even give him any explanation,” says the Metroman. He was confident he had chosen the best and followed all the required procedures. Finally, Sreedharan’s choice was accepted. “That one incident [withstanding political pressures] increased the confidence of my team enormously,” he explains.
IF YOU RUN
A COMPANY Pick a Few Good Men This one is a lesson by Sreedharan and about him. Despite being older than the 
rulebook allowed for (he was 65 years old), the government handpicked him for the job of heading the Delhi Metro project. The then Delhi chief minister, Sahib Singh Verma, the then Delhi lieutenant governor, Tejendra Khanna, the then Delhi chief secretary, Jayakrishnan, pushed for his candidature around 1996. “We were convinced Sreedharan was the one who could make it possible,” recalls Jayakrishnan, who is now the chairman of the central empowered committee on environment. So the then prime minister HD Deve Gowda granted special permission to let Sreedharan take charge as the DMRC head. The choice of the correct leader laid the foundation of DMRC’s dream run.
    Sreedharan also relied on a good team to translate his vision into reality: “I asked the government for two things — the independence to operate with no interference from politicians and bureaucrats. And the freedom to pick my own team.”
Practice What You Preach As the top boss, religiously follow the rules critical to establishing the company’s values. Punctuality is
DMRC’s hallmark — trains roll 
into stations precisely by the minute, meetings start on schedule and employees must walk into the office before 9 am. “Our business is about being punctual. We cannot compromise on it,” says Anuj Dayal, chief public relations officer, Delhi Metro. This is why, if an employee is five minutes late to work, it is clocked in as a half-day. The philosophy is: if you are late for office, you could be late for the project. Says Dayal: “Our trains are 99% punctual.”
    Sreedharan leads by example: he is never late for any commitment, at the work sites or at meetings. Speed is the buzzword. Decisions at DMRC are quick, with tenders as big as 2,000 crore are cleared in 15-20 days without missing out on any government procedure or audit guidelines.
Seek Different Narratives You can never pre-empt the company’s problems by staying closeted in the corner office. Sreedharan ensures he is always in the loop of the goings on of the company. Every Monday, at 9.30 am, he holds weekly meetings attended by the four directors and 40-odd department heads. This is a freewheeling chat and the minutes of the meeting are not recorded. Sreedharan takes stock of the previous week’s performance and sorts out glitches for the future. “We discuss everything here. That is one place I send my message to my people,” he says. For ready reference, he always carries a small diary to take notes.
    On the first Monday of every month, Sreedharan also holds a meeting with midlevel managers to get a broader sense of the issues and his employees. He is approachable for all and does not limit his interactions by hierarchy. 
Challenge Yourself and the Team Stagnation sets in after efficiency so pull up goal posts and demand higher quality standards to force constant improvements. DMRC executives say every time their goal seems achievable and easy, Sreedharan throws up a surprise by setting a tighter deadline. He then works with his team to make it possible.
    Sreedharan is humble, thrives on challenges and faces them head on. Recalls Rakesh Mehta, ex-chief secretary, Delhi government: “There was a Calcutta Bridge near ring road in Delhi that we wanted to widen. The project was awarded to a contractor. After spending 10 crore over four years, he gave up in 2004 claiming it was logistically impossible. There was a drain pipe under the bridge and the contractor claimed the road couldn’t be broadened without damaging the pipe.”
    Desperate, Mehta called Sreedharan for help. Within 24 hours, he visited the site
    with his engineers, redesigned the
    process, suggested minor modifications and the bridge was later completed within a year.
Keep the System
Squeaky Clean The message must go out loud and clear: integrity is priority and non-negotiable for the company. DMRC is perhaps the only mega infrastructure project of the country considered free from corruption taints. To achieve this, Sreedharan puts ethics high up on his goals list. He personally handpicked his team members in the initial years after lot of due diligence. Once on board, strong structures and procedures are in place for every activity — from tendering of contracts to recruitments — to keep employees on the ethical path.
    To foster values, a copy of Makaranda Bhagwadgita is given to all employees when they join. “I do not consider it a religious text. It is an administrative gospel that teaches you how to face challenges and overcome them,” says Sreedharan. All new DMRC staff also take an oath of integrity when they come on board.
IF YOU HEAD
A PROJECT Keep the To-do List Small When the time period is short, prioritise to keep confusion out of execution. And don’t pile your plate too high. In 1989, Sreedharan was appointed member, engineering, Railway Board for only 11 months. His ex-colleague, CBK Rao, now a senior adviser, ITNL Enso Rail Systems which is developing rapid metro rail in Gurgaon, recalls how Sreedharan picked only three goals for the stint: to reduce track fracture, improve quality of rails and their welding. As a result of his focus, in 11 months, there was spectacular progress on all three fronts, Rao recalls.
Think Bigger Than the Brief... A bridge is just a bridge till you envision it as a state-of-the-art engineering wonder. Sreedharan always dreams big. “I have always aspired to get the best technology available in the world,” he says as an example. This has translated into many technological firsts for Delhi Metro. For instance, it was the first in the world to use contactless smart card technology — where the machine could deduct fares from the smart card from a short distance.
    To sustain this edge, employees at DMRC are encouraged to go abroad and understand new technologies. These tours are no holidays, says an official with the company. The trips are packed with meetings and appointments. As a result Delhi Metro keeps up with the latest trends in engineering.
    “I can say we have got some of the best experts of the world in each category — from signalling to engineering — in my office today,” says Sreedharan.
...And Beyond It Be proactive and don’t shy away from unconventional solutions as long as the problem is resolved. The focus must be getting past an obstacle. Here’s how Sreedharan does it. In 2009, DMRC was building the Delhi-Gurgaon line which was to pass through some Chhatarpur farm houses. The owners took the matter to court and work was stopped. Realising that the legal wrangle will delay the project, Sreedharan got his engineers to build an entire station of pre-fabricated steel. Six months before the metro line was to be commissioned, DMRC won the case. Then the employees simply moved the steel box and erected the station — and met the deadline.

Ten Things Only Bad Managers Say

Ten Things Only Bad Managers Say

Economic Times,                     29^th September 2011

Reality Check: How many of these not-so-nice some things do you hear in office?

By Liz Ryan

We know the kinds of things good managers say: They say “Attaboy” or “Attagirl,” “Let me know if you run into any roadblocks, and I’ll try to get rid of them for you,” and “You’ve been killing yourself—why don’t you take off at noon on Friday?” Bad managers don’t say these things. Helpful, encouraging, and trust-based words and phrases don’t occur to them. Crappy bosses say completely different things. For your enjoyment, we’ve gathered together 10 of the most heinous, bad-manager warhorse sayings. Do any of them sound like something a manager in your company might say (or might have said this week)?

1 If you don’t want this job, I’ll find someone who does
Great leaders understand that the transaction defining the employeremployee relationship—the fact that an employer pays you in cash while you cough up your value in sweat and brainwork—is the least important part of your professional relationship. Good managers realize that to get and keep great people, they have to move past the dollars-and-cents transaction and let people own their jobs. Good leaders give people latitude and let them know that their contributions have value. Lousy managers, on the other hand, love to remind employees that it’s all about the transaction: “You work for me.” They never fail to remind team members that someone else would take the job if you ever got sick of it or let the lousy manager down in some way.

2 I don’t pay you to think

This is what a bad manager says when an employee offers an idea he doesn’t like. Maybe the idea threatens the inept manager’s power. Maybe it would require the lousy manager to expend
a few brain cells or some political capital within the organization. Either way, “I don’t pay you to think” is the mantra of people who have no business managing teams. It screams, “Do what I tell you to do, and nothing else.” Life is way too short to spend another minute working for someone who could speak these words.

3 I won’t have you on eBay/ ESPN/Facebook/etc. while you’re on the clock
Decent managers have figured out that there is no clock, not for whitecollar knowledge workers, anyway. Knowledge workers live, sleep, and eat their jobs. Their e-mail inboxes fill up just as fast after 5:00 p.m. as they do before. Their work is never done, and it’s never going to be done. That’s O.K. Employees get together in the office during the daytime hours to do a lot of the work together, and then they go home and try to live their lives in the small spaces of time remaining. If they need a mental break during the day, they can go on PeopleofWalmart.com or Failblog.org without fear of managerial reprisal. We are not robots. We need to stop and shake off the corporate cobwebs every now and then. If a person is sitting in the corner staring up at the ceiling, you could be watching him daydream—or watching him come up with your next million-dollar product idea. (Or doing both things at once.)

4 I’ll take it under advisement
There are certain words that we never use in real life—only in business and only in ways that let us know that the speaker is shining us on, bigtime. “I’ll take it under advisement” means “Go away and die, and don’t speak to me again unless I ask you to.” It means “I am not going to do whatever you just suggested that I do, and I want you to know that I value your opinions less than I can tell you.”

5 Who gave you permission to do that?
My brother worked at a huge tech company, and one day he and his team of Software Quality Assurance folks were meeting at the office before heading to the airport. They gathered at 6 a.m. in a conference room to talk about their plan once they hit the ground in the destination city. The door opened and a manager walked into the conference room. “Who called this meeting?” he asked. “Only a grade level E5 can call a meeting.” My brother left that job a few months later. People who obsess about hierarchy and permission and grade levels and the like are people you’d be better off avoiding, especially in relationships that give them power over your life and career.

6 Drop everything and DO THIS NOW!
Any manager can have a last-minute emergency that pushes everything else out of the way. Good managers pull this move sparingly and only in real crises. Poor managers do it every day, and they never remember the dozen equally critical (at one point in time) priorities they’ve already told you to drop everything else for. A good comeback if your manager has this habit is to answer, “Yes, of course. That’ll push [yesterday’s drop-everything project] to next Thursday—is that fine?”

7 Don’t bring me problems. Bring me solutions
This chestnut showed up during the era when people were beginning to think about business process and realizing that employees could often solve their day-to-day problems in the moment and on the ground, rather than having to go upstairs to get help. That’s O.K., but too many managers have reinterpreted “Bring me solutions, not problems” as “Don’t complain—shut up and deal with it.” The fact is, business processes and organizations are complicated today, and often the employee who spots a problem doesn’t have the information she or he needs to solve it. That’s where a manager can help, if he or she is oriented that way. Managers who say, “Bring me solutions” are often really saying, “Stop telling me what I don’t want to hear.” Working for a person like that will shorten your lifespan.

8 Sounds like a personal problem to me

One of the worst situations I ever encountered as a corporate HR leader involved an employee who went off the rails on a business trip for a Las Vegas customer event. I heard through the grapevine that two employees assigned to share a hotel room had exchanged heated words. On investigating, I learned that the hot mess of an employee had gotten drunk in Las Vegas and showed up (still drunk) in her hotel room with her (also drunk) cabdriver/instant boyfriend in tow. I was horrified on a million levels and virtually ran to her manager’s office to talk once the trip was concluded. “How are we going to deal with this?” I asked him. “Oh, it’s O.K.,” he said, “I told the two young ladies to sort it out between then.” “But—but,” I sputtered, “our employee got drunk and disorderly, was nearly arrested in the hotel, brought a drunk stranger into her shared hotel room, and wouldn’t leave when her co-worker protested. The poor marketing gal had to call another co-worker and switch rooms at four in the morning!” “I know,” said her manager, “and I think there’s a lesson there in how to work harmoniously on a team. I’ve asked the two women to have lunch and talk about it.” That didn’t happen, because we fired Ms. Unruly the same day. If your manager can’t see misbehavior and snuff it out, you have a problem.

9 I have some feedback for you … and everyone here feels the same way
Good managers give their employees feedback when it’s warranted, and they try to emphasize and reinforce the good things. Bad managers don’t give praise, but they ladle on the criticism, and the really bad ones add an extra twist of meanness: They say, “Everyone here feels the same way.” Pretty soon, you start to feel that you can’t trust anyone in your shop and that everyone hates you—until a coworker mentions that your lousy manager said the same thing to her. Poor managers need to throw in a few dozen extra “votes” with their barbs, just to keep employees off guard. A true leader would talk about conflict or performance issues regularly in staff meetings, resolving whatever is at issue without passing along anonymous jabs.

10 In these times, you’re lucky to have a job at all
The funniest thing about a manager who would open his mouth and say, “You’re lucky to have a job at all” is that these managers never seem to think they’re lucky to be working—just everyone else. “You’re lucky to have a job at all” in an era of more than 9 percent unemployment is the same as saying, “I can’t believe you manage to stay in that 90 percent of the population that is working.” It’s a huge insult, but worse, a statement of personal failure on the manager’s part. People who live in fear don’t tend to see the potential in themselves, or in others. If your manager’s native mode is critical, and if she tosses around compliments like manhole covers, know that there are plenty of other employers who’d be happy to have someone like you in the mix.
(Liz Ryan is an expert on the new millennium workplace and a former Fortune 500 HR executive.) Reprinted by permission from Business Week International, (23/09/11), a McGraw-Hill Companies, Inc. publication

Top 10 Financial Planning Rules of Thumb

Top 11 Financial Planning Rules of Thumb

http://www.tflguide.com/2011/09/top-10-financial-planning-rules-of-thumb.html

September 6, 2011

In life people want shortcuts – I think that’s the reason rules of thumb find some place in once life. These financial planning rules of thumb are very basic & not at all full-proof as requirement of 2 different people can never be same. They can just give you some idea but important financial decisions should not be taken on basis of these. Editor of The Journal of Financial Planning (US), once noted that “Rules of thumb are for people who want to decide things without thinking about them.” But still it will be unfair to suggest ignoring all of them.

Saving & Investing rules of thumb

1. What should be my asset allocation or how much equity should I have?

This is the most common rule of thumb which is used in investment world. Rule says Equity percentage in your portfolio should be equal to 100 minus your age or in other words debt should be equal to your age. For eg if you are 30 you should have 30% of your investments in debt & 70% (100 – your age) in equity. This doesn’t take care of risk appetite, risk tolerance or how far your goals are.

2. How much emergency fund I should have?

Emergency Fund helps people in case of sudden loss of income, medical emergency etc. Thumb rule says one should have emergency fund equal to 3 to 6 months of monthly expenses. You can keep it at 3 month if you are a government servant but in case of private job or profession you should keep it on the higher side of the range. Make sure you don’t use this amount for day to day needs/wants. For retired person emergency fund should be equal to 1 year of expense.

Retirement rules of thumb

3. How much money will I need in retirement or how much corpus I should build?

You should have 20 times your income saved for retirement and plan to replace 80 percent of pre-retirement income. But here retirement means a retirement at age of 60 ; life expectancy of 80 – and a conservative lifestyle. But now things have changed; you would have dream/planned lot of things for retirement.

Another method is to have liquid assets with cash equivalent of at least 100 months of last income for simple normal living and medicare of spouse and self. It is better if the multiple is 120.  These liquid assets should be interest or dividend yielding.

Another simple method:
No. of retirement years....till death of individual and spouse...whichever is longer/ later multiplied by money required for first year of retirement.....for this

• Money here is simple cash assets or equivalent ...
• no land/ sites...considered
• if a building, rental value is considered....
• self occupied house is not considered..

4. How much I need to invest every month to achieve retirement goal?

“Indians are great savers” sorry “Indians were great savers”. New generation is in some different mood they would like to enjoy the present & have no idea about future. If you have just started to work & would like to have a very simple lifestyle & retirement at age of 60 you can do it with saving (read investing) 10% of your income. If you are planning for an early retirement start with 20% savings. Other rule says if you are in early 30s Save 10% for basics, 15% for comfort, 20% to escape. If you are late by decade add 5% more in each category.

Insurance rules of thumb

5. How much insurance should I have?

Here insurance means insurance. Rule says one should have sum assured of 8-10 times of his yearly income. I think this rule is far from perfect but still can be used as starting point. This does not take care of any of your goals, liabilities & even complete expenses. Some modified version of this rule says that if you are in early 30s insurance should be 12-15 times of your annual income; if you are in 50s take 6-8 times.

Loan/liability/home rules of thumb

6. How big should be my House?

The value of house should be equal to 2-3 times of your family annual income. So if you & your spouse are earning total Rs 20 lakh – you should buy a house in Range of Rs 40-60 Lakh. But never exceed 60 month salary.

7. Maximum EMI that I can have?

Ideally 0 will be the best answer but few of the big assets like home require some loan to buy them. Experts agree that your EMIs should not be more than 36% of Gross Monthly Income at any point of time. It should be even lesser when you are close to your retirement. If you want to talk about home loan EMI, it should not be greater than 28% of your gross income. Now TENURE of loan is missing here – for tenure read No. 6 & 8 rules of thumb.

8. Rules of thumb for buying a car

This is one of the biggest purchases after your home. And this is depreciating asset – today morning you purchase a car for Rs 10 lakh & by the evening it will be worth Rs 8-9 Lakh. After 5 years it will not be even of half value but still you keep buying cars regularly – buy at 10, sell at 4 & loose 6. (repeat the cycle) There are few rules that you can follow:

• Value of car should not be more than 50% of the Net annual income of the owner.
• Purchase a used car or buy a new & use it for 10 years.
• While buying car with loan stick to 20/4/10 – Minimum 20% down payment, loan tenure not more than 4 years & EMI should not be higher than 10% of your income.

Rate of return Rules of Thumb

9. In how many years my amount will double?

It’s a very simple & most common rule – if you divide 72 by rate of return you will get the number of years in which your money will double. For Eg. If you expect a rate of return of 12% you money will double in 6 years (72/12=6) & what about if rate of return is 8% – 72/8=9 years. This can also be used in reverse order at what rate your money will double in 5 years – 72/5=14.4%

Rules similar to rule of 72:

Rule of 114 & 144

These can help you in how many years your money will be triple (114) or quadruple (144) at some rate of returns.

Rule of 70

You know it or not but inflation is your biggest enemy – rule of 70 will tell you in how many years value of money will be half. You just need to divide 70 with rate of inflation so if rate of inflation is 7% – 70/7=10 years. So in 10 years your Rs 100 note will be worth Rs 50.

10. Rule 10/5/3

This is a US rule of thumb which says in long term you can get 10% return from equity, 5% return from bonds (let’s say FDs) & 3% from the t-bills (liquid funds – these returns are more or less close to the range of inflation). Indian economy is growing at some different pace & even inflation numbers are different. Can we safely say if inflation is 6% (t-bill rates) we can get 8% from the fixed deposits & 12% from the equity or in other words – in long term equities will deliver twice the return of inflation. Try combining Rule of 72 with this rule – you will get some amazing numbers.

11. Wealthy:

consider yourself wealthy? A rule-of-thumb formula used by Thomas J Stanley & William D Danko in The Millionaire Next Door, a book that studies selfmade American millionaires, can help determine if you are.

(Age *Pre-tax income)/10 == Net worth

The logic behind the formula is that the older you are and the more money you make, the more net worth you should have. Dividing by 10 is a rule-of-thumb that fits current culture. So if you are a 35-yearold living with an annual income of Rs. 6,00,000 a year, your net worth should be Rs. 2.1 million [(35 X 6,00,000)/10 = 21,00,000] for you to be considered wealthy. If you are 20 years old and you make Rs. 3,00,000 lakh a year, you would be wealthy if your net worth was greater than Rs. 6,00,000.

Some time Rules of thumb will give you false sense of security or wrong guidance – so take them with pinch of salt.

Nurture Innovative thinking

Analysis of the world's most innovative companies suggests a few common things:

• Keep Company populated with people — including senior managers — who excel at the five skills of disruptive innovators:
• questioning,
• observing,
• networking,
• experimenting, and
• associational thinking
• Keep processes that encourage employees to question the status quo, to engage in observations in all types of environments, to network far and wide for ideas, and to experiment on a regular basis.
• Keep encouraging everyone to "think different" and reward those who do.