The following article is an extension of The Resilient Consultant (Part 1 of 2):  Five Steps to bounce back from failure.  It’s a logical spin-off to cover what I believe to be an extremely vital topic, which will most assuredly help you obtain some perspective.  It will provide five key steps to minimizing future engagement failures and protect your personal brand in the process.  I’d like to point out that these steps go beyond a standard methodology for managing an engagement.  There are plenty of materials out there that cover that space, so you won’t find that here.  What you will find are proactive steps an individual can take across the full range of the sales life cycle, from pursuit to execution, that better position him or her for success. 

However, just like any other methodology, the following guidance will not guarantee that you never encounter a bad engagement again.  In fact, I suggest that you accept the absolute certainty that you will be confronted with bad engagements at some point, so please save yourself the suspense.  Some of the most dramatic personal growth I’ve achieved in my career has come directly from bad projects.  Don’t be afraid of the challenge; embrace it.  Just be mentally prepared to take on anything and get ready to adapt. 

The real value from this piece comes from helping consultants understand that they do have some control over their destiny.  I say “some” because there are certain elements that are quite frankly outside of anyone’s control, such as client timing and resource availability.  But by melding the following guidance into your existing professional routine, it will help avoid engagement difficulties, and increase the likelihood of overall engagement success.   If your goal is to achieve some semblance of longevity in your professional services career, please take these steps seriously.  Although a few of the steps may appear to be “common sense” at face value, the old adage of “common sense does not always equate to common practice” could not be a more apt description. 

Five Steps to Minimize Future Engagement Failures:

1.) Become a professional skeptic:  Let me be clear:  Becoming a professional skeptic does not mean an individual should act like a crotchety-old cynic who doesn’t believe in the “system.”  A professional skeptic is one who consistently asks the right questions in order to ascertain exactly what will be expected for a particular project and clearly understands the type of environment to which he will be exposed.   A professional skeptic always demands more information as he understands the necessity to be overly prepared and totally aware of what he’s getting into.  In some cases, even a seasoned skeptic may not have any choice as to where he lands.  But… rest assured, he will always consider the following: 

• What is the project scope, timing, cost and quality expectations?  Is there a Statement of Work (SOW) available for review?  Or any other supporting documentation, for that matter?
• Have the current or previous engagement teams had success dealing with this particular client?  If not, what were/are the challenges?
• What is the engagement atmosphere like?  Are resources unhappy being there?  Overworked? Underworked? 
• What are the logistics of the assignment?  Location, on-site expectations, start date, vacation constraints, etc
• Who are the team members he would be working with directly?

1b.)  Questions  professional skeptics would ask of themselves before committing to anything:

• Do I really have the right skill set the engagement team is looking for? 
• Is this opportunity in line with my career goals?
• Will this opportunity provide me with the right exposure?
• Is there anything that feels “off” to me about this engagement?
• Do I feel I can work cohesively with the personalities I know I’ll be working with?

2.) Look before you leap:  Beware, since sometimes opportunities can be presented in a much more positive light than they really should be.  Once you’ve received responses (from existing engagement or pursuit leadership) to the questions above, be sure to do your homework.  Inquire within regarding team members and the client (if possible) by leveraging your existing network of contacts.  Candid conversation may lead to uncovering any significant issues with a particular account or pursuit, if any should exist.  Remember, the focus here is not to go out of your way to find something wrong.  You’re just trying to understand the entire environment and any other relevant nuances that will prepare you to be that much more successful.   

Most reputable firms have a deployment team or resource schedulers.  These individuals monitor resource availability and client demand.  More specifically, these folks act as brokers who try to match available skill-sets with client needs.  They are intimately aware of client environments, and in many cases have a sense as to whether a particular engagement is going well or not.  Why do I say this?  Well, if an existing engagement is going poorly, for example, there may be a staffing request to bring on new team members to help fix the problem ( i.e.  replacing existing team members who may not be cutting the mustard).  Of course, there may be a number of reasons a resource might be replaced, but guess what…deployment knows or at least has some insight.  Trying to develop relationships with these resources could prove extremely useful.  Imagine the perspective you can glean from individuals whose main job is to staff resources to address client issues. 

Also, the rumor mill is usually pretty accurate within large firms.  If you heard a particular engagement is a meat grinder or dream environment (from multiple people across multiple practices), chances are that’s what you in for.  The important thing here is to trust but verify.  Always look before you leap.  

3.) Set Expectations:  Once you’re on the verge of joining an engagement or win a pursuit, be sure to set expectations with your team early on.  Do this during your early interviews with the client or engagement manager!  If you’re a subject matter expert (SME), then let your team and client know exactly how you plan on attacking the work.  Be thorough, yet concise.  However, if you’re not an SME in the space you were brought on for, don’t pretend to be.  Ideally, you always want to align your experience with the very same client need, but most consultants know that that does not always happen.  Sometimes there’s just no one else around and you’re brought in as “the guy” or “quasi-expert”.  Unfortunately, it happens.  Make sure your team is aware of this from start to finish, so that they never lose sight of the fact that you’re operating in a less then optimal situation. 

Also, be straight with the client, since she will eventually sense or outright notice that something is off.  In some cases, the client will accept the learning curve as long as she is still receiving the overall value she needs.  In others, the client may accept nothing short of a genuine SME, in which case you should pull yourself from the assignment because the last thing you want to do is present yourself as something you’re not, then be given a poor performance review because you did not perform as an expert would.  Be candid and clear with what you can and cannot do.  Set expectations so there is transparency in every step of the project.   

4.) Build Relationships:  A surefire way to anchor yourself within a new engagement is by building relationships within your team and with the client.  Share your knowledge, let them know what you’re capable of and, most importantly, connect with individuals on a personal level.  Learn about their families and hobbies; understand what makes them tick.  This insight will prove invaluable over the long run as that very bond will foster better communication and just make for a more pleasant working environment. 

Personally, I’m a strong proponent of team or client gatherings.  It takes time to cultivate relationships regardless of whether they are internal or client team members.  As a consultant, there is some control over dictating gatherings amongst your peers or subordinates, so do it!  This is vital early into any engagement to build morale and trust.  Team dinners or drinks are always crowd favorites, but don’t forget to build in check-points during work hours for those individuals who just can’t make evening events. 

Client interactions vary greatly, but the important thing is always to be available and responsive.  I’d like to stress responsiveness as there’s no quicker way to turn off a client than by not getting back to her in a timely fashion.  It’s the foundation upon which trust is built.  It’s very difficult building a relationship with a client if she senses you don’t have her back at all times.  As the relationship developments, so typically do personal interactions.  A prudent approach would be to maintain a professional distance; however, don’t be afraid to provide the client with a glimpse into your personal life (if she seems remotely interested in it, of course).

5.) Keep Your Eyes Wide Open (Watch, Listen and Learn): 
An important tool in any consultant’s toolbox is his ability to articulate ideas.  In other words, talk.  As you might expect, talking is crucial during the sales cycle, but it’s just as important after the work has been sold.  Moreover, once you’ve entered into the realm of delivering work, it’s even more crucial that you demonstrate an ability to listen.
 
Always listen and reaffirm what you hear during client interactions.  The greatest mistake a consultant can make is assuming that he knows what the client needs before she explains her requirements in her own words.  In most cases, the client will flat-out tell you exactly what she needs.  Just listen!  Hubris can really take hold of a seasoned professional if he allows it to.  Don’t fall into that trap.  Listen to all relevant stakeholders and team members to ensure you’re delivering what’s really needed at all times. 

As an engagement progresses, team members will often be exposed to different facets of the client’s business.  This exposure is incredibly important not only to the current project at hand, but also to future opportunities.

The important takeaway here is to be cognizant of your surroundings at all times.  Do not be myopic!  Consultants are typically part of “practices” within their firm.  These are groups of professionals under the same umbrella who focus in on a particular service offering.  Unfortunately, once a member of a practice is staffed on a particular engagement, there’s not always a desire on the engagement manager’s part to expand the team.  There may be a tendency to keep the team small in order to maintain the status quo, especially if there’s no opportunity to staff others from his own practice.  A team member will always score more brownie points within his practice if he manages to get resources staffed from his own group.  This is an extremely short-sighted approach to take. 

A consultant’s main focus should always be to address client needs, even if those needs are coming from a different practice.  If there are other teams within the firm that can help the client, bring them in!  Play the role of a trusted advisor by reacting to what’s really needed in the client’s world.   Furthermore, including other practices yields a very important and tangible benefit:  It entrenches your firm’s presence within the account.  Deeper entrenchment leads to a broader relationship, which in turn increases the likelihood of future opportunities. 
Become a professional skeptic, look before you leap, set expectations, build relationships and finally…keep your eyes wide open.  I’ll leave you with one of my favorite quotes that I think is a fitting way to close this article.  It’s from the rather infamous Donald Trump, and goes like this: 

Watch, listen and learn.  You can’t know it all yourself…anyone that thinks they do is destined for mediocrity.

In the last few weeks some of my friends and colleagues have been very busy debating the global economic situation and trying to figure out where we are heading. GO Figure! Eh…. I so wish I could help them and had answers to all their questions. But then on a second thought no harm in trying…. right?

Let us look at the last few months to get a good handle of where we are, shall we? To begin with I must say if we look at the events unfolding in the last couple of months there was no dull moment and it has been an action-packed rollercoaster ride which has kept us busy and entertained but this depends on how you look at it.

Shall we do a quick RECAP and look at some of the HIGHLIGHTS of the past few months?

Starting with China we saw Agricultural Bank of China raise a record US$ 22 billion in IPO. It was the world largest IPO, the previous record was held by ICBC- China after raising US $ 21.9 billion in IPO. Although some suggested that the reception for Agricultural Bank of China ( Ag Bank ) was lackluster and the IPO was apparently overvalued but most of the analysts surveyed by Reuters expect the stock to go up to RMB 2.81 relatively quickly. Up to 40% of the Shanghai offering was sold to about 27 strategic investors including of China Life Insurance, China State Construction among others on a 12-18 months lock-in period. And from the Hong Kong listing a total of around US $ 5.5 billion worth of stocks were sold to Qatar and Kuwait’s Investment Authorities. It is interesting to note that the bank which was considered by many as technically bankrupt with more than 24% in non-performing loans around 3-4 years ago managed to raise a colossal amount of money and also reported a 40% jump in net profit in the first half of 2010. I wonder how Ag bank’s turnaround reflects on the investors’ confidence especially those reluctant to hold bank stocks and may be other banks could take a leaf from Agricultural Bank of China’s book? Let’s see.

In the short to medium term the market expects China based banks to raise more money as their balance sheet comes under pressure due to excessive lending to the property market. The China Banking Regulatory Commission (CBRC) has instructed the Chinese banks to test the impact of a 50% fall in the house prices in major cities across China. This is in addition to an early nation-wide stress test that showed the local banks in China could sustain a fall of up to 30% in housing prices without a sharp increase in non-performing loan ratios.

It is highly plausible that the Chinese Government will continue with its controls to restrain the property market fearful of the social pressure that could arise from a BOOM-BUST in property sector as recently seen in the US and in Japan in the 80’s. And this is already feeding into the overall demand from things like construction raw materials including of steel, cement etc to household products among others.

Most of the recently published figures show a softening in demand. The annual factory output in July slipped to 13.4 from 13.7 in June although above the consensus but still a decline. The Consumer price inflation fell to 2.9% in June from 3.1% in May. These figures along with the weaker retail sales indicate clearly a slowdown in the economic activities across which was reflected in the second quarter (Q2) GDP numbers.

According to the National Bureau of Statistic (NBS ) the growth fell to 10.3% in Q2 from 11.9% in Q1 of 2010. The Q2 GDP print was below the market expectation of 10.5%.

Although there are different view as to where the Chinese economy is heading I believe the GDP and other data are in line with expectations and there is no alarm yet. The slowdown as expected looks moderate and I believe there will be no policy relaxation from Beijing in the immediate future especially based on these set of numbers. So going forward we may see the investments come down and the recent numbers out do point in that direction. Let’s look at them. According to the Central Bank the total loans for the month of July stood at RMB 533 billion, below the forecasted RMB 600 billion, the year-on-year credit growth has also slowdown sharply to 18.4% in July, well down from 33.8% of last year, also the annual growth in the broad M2 measure of money supply considered the lubricant of economic growth slowed to 17.6 percent in July from 18.5 percent in June.

What all this means is we may see further softening in demands in China which will reflect badly on imports including of commodities and machineries etc going forward. To add to that we are already seeing a significant buildup in inventories and this is not what you want to hear if you were a German machine manufacturer, a miner or a commodity driven company/economy. Some in the financial markets may worry that the policy makers in China are applying the brakes too hard to slowdown the economy which could take out a big chunk of the existing global demand especially because China has been a major driving force. And this may reflect badly on the overall global growth prospect and recovery.

There is no doubt that the slowdown in economic activities is in line with Beijing’s expectation and this is clearly a government engineered slowdown as the market feared an overheating of the economy earlier this year and some analysts even suggested that it may be too late for Beijing to a get grip over the runaway economy. This is why I keep telling my friends and colleagues never underestimate the policy makers in Beijing.

The other side of the story is that the economy is still holding up and even with the current slowdown in activities the consensus view is that China could still grow at 9% or there about in the FY 2010. This is by no mean the end of the world as some may fear. I believe it is worth noting that going forward the government may start to ease its credit policy especially if there are signs that the economy is slowing down too rapidly for Beijing’s liking and so by the end of the year they may speed up targeted investments in areas such as low-income housing, rural development and clean energy. Also we shouldn’t forget that one of the advantages of the existing political system in China is that it allows the policy makers to acts faster and swiftly unlike their peers in other parts of the world.

Staying with Asia the fact is many policy makers across Asia are starting to worry more about inflation and hot money flow than a double-dip. Most economies in Asia including of Hong Kong, Singapore,South Korea, India, China, Indonesia and Australia among others have all seen a very significant capital inflows in 2009 and the first half of 2010 mostly from investors attracted by their growth potential. And now there is a genuine concern that the amount of hot money committed to Asia and Emerging market as whole could create an Asset bubble going forward. In fact European and American equities markets are looking cheaper then developing markets and you wonder if some emerging markets may have already produced most of their gains. That said the growth story of the emerging markets is still intact and investors looking for growth will remain extremely attracted to the EM.

So far this year Southeast Asian Markets has had a very strong run and as of the end of July, Indonesia was the best-performing market in the world in 2010, the Jakarta Composite Index up 26.2 percent; Thailand’s main index was up 19.7 percent; Malaysia’s 14.5 percent and The Philippines’ 13.0 percent. However, Singapore Straits Timex Index was only up by 6.3% in the first half of 2010 despite a second quarter (Q2) GDP print of 19.3% year-on-year. The city-state economy is benefiting from government investment in the bioscience, electronics and construction sectors among others and is expected to grow at around 15% or more in the FY 2010.
Moving on let us look at what’s cooking in Europe shall we?

The recent numbers out from the Euro Zone clearly point to a two faced growth in the Euro area. While Germany the largest economy in the Europe expanded at the fastest pace in over two decades reporting a 2.2% growth in second quarter (Q2) and was responsible for almost two thirds of the Euro bloc’s second- quarter growth but unfortunately its southern European counterparts are still struggling to recover from the CRISIS.

Germany’s business confidence data- Ifo index continues to be on the ascending trajectory showing the strongest increase since the reunification in 1990’s. The unemployment rate in June declined to 7.5 % from 7.7 % in May the jobless numbers was down by 88,000. This was mainly due to the government support for maintaining employees on the job with shorter hours instead of laying them off. The economy seems to be getting in shape and the export driven business model of Germany is in full swing. All the signs show that the Germans export benefitted heavily from the demands coming from Asia especially China but going forward it is highly plausible that the growth may lose momentum because of the strengthening Euro and softening in demands from countries like China. Also in the second half of 2010 the austerity measures will kick in hampering the growth further.

The austerity measures are already crippling growth in countries like Latvia, Greece and Ireland. Take for example LATVIA –one of the first EU nations to implement austerity measures two years ago. The huge budget cuts have made the matter worst. Also Greece has been hit harder than previously forecasted after implementing the severe austerity measures and it is highly likely that the growth will remain negative for this year hurting the economy even further. According to a recent research published by the retail confederation ESEE about a fifth of small shops in Athens have shut down because of the downturn. The unemployment is expected to go higher from its current 12% level hitting the private consumption further. The ongoing recession is deepening consumers’ insecurities about jobs and debt, making them cut their spending and to try to wind down borrowings. It is highly plausible that the impact will become more pronounced in the second half of 2010. We will have to wait and see. It is going to be a real test for the voters and politicians.

There is a genuine fear in the market that with the austerity measures kicking in around the second half (H2) of the 2010 some of the European nations including of Spain may slip back into recession after reporting a GDP growth of 0.2% in the second quarter (Q2 ) creating a growth gap and making it harder for the European Central Bank (ECB ) to correctly gauge the timing of its policy tightening steps. As things stand I think it is safe to assume that it’s too early for ECB to start thinking about tighter policies and one should not get carried away with Germany’s second quarter ( Q2 ) growth numbers. The reality is Euro Zone countries are still struggling to keep their head above the water and in most countries across the EU the wage pressure are downwards and the core inflation stand at just 1%. Also besides Germany other major European economies like Italy are struggling with the mountain of debt and raising money for them in the market is not getting any easier as reflected by recent jump in the spreads. Based on Bloomberg data for the first time since June 28 the premium that investors demand to hold 10-year Greek bonds against a German government bond of same maturity rose to 800 basis points (bps) and the Spanish government bond yields climbed six basis points to 4.24 %. Most investors are also shunning Spanish banks because of their record borrowing of 130.2 billion euros from the European Central Bank in July of 2010.

It is also worth noting that while Germany is forging ahead the others in the EU believe that it is doing so at their expense. By cutting the budget deficit and keeping the wages down Germany is in fact making it harder for other EU states to regain competitiveness. It will be interesting to see how all this plays out for the Euro Zone going forward.

The hope is that the European leaders will learn from their past mistakes and going forward they will look beyond their national interest and work together towards perfecting the Union. The Union was not designed or conceived to handle a CRISIS it clearly exposed the flaws and also the limits of EU integration and coordination.

Staying with the EU let us also look at the performance of the UK economy, a prominent EU member and a major trading partner, in the last few months.

According to the office of National Statistics the UK economy grew at 1.1% in the second quarter ( Q2 ) of 2010. The Q2 GDP print was well above the market forecast of 0.6% but as per my expectations. I wrote a piece in April of 2010 titled “Market Psychology and Investors Sentiment (mood of the market) – The Driving Force Behind the markets “. I have copied an extract from the post which explains the reason behind my assumption.

And in terms of growth, going forward we could see a market beating quarterly GDP numbers and the reasons for that is simple we simple don’t know how much spare capacity is left in the economy and the inventories are so LOW that even with the existing and basic demand you will see a pickup in growth and this could PUSH the market up

So does that mean the UK economy is now getting back in SHAPE?

Well let’s look at the bigger picture to get a better IDEA. A recent survey done by the building society Nationwide puts British consumer morale at the lowest since May 2009. According to Nationwide the rising food and fuel costs may also have played a part in the drop in consumer confidence indicator from 63 in June to 56 in July. The survey also showed a sharp fall in households’ sentiment about the economy, job market and income over the next six months. Consumers are growing increasingly concerned about their disposable income and the planed VAT rise from January of 2011 probably won’t help that concern going forward.

Also according to the Royal Institution of Chartered Surveyors the house prices fell for the first time in a year in July because of the buyers’ reluctance to commit as the sellers rushed to sell their properties. There is a risk that we may see this softer trend continue in the second half (H2) of 2010 as many prospective buyers are still struggling to raise mortgage finance. I believe it is worth noting that the high profits for banks in the first half of 2010 were also facilitated by lower impairment of existing mortgages and expectations that house prices would be stable. Going forward a slowing housing market along with the planned 25% government spending cuts, VAT rise, and a high unemployment among others will add to the uncertainty facing the Bank of England as it tries to guess the growth prospects for the UK economy.

The new coalition government in Britain has decided to strip down to its bones as it prepares to cut the expenditures by more than 83 billion pounds over the next five years and drastically shrink its responsibilities. You can’t help but wonder if the economy can survive a starvation diet. Imagine an extra extra extra large ( XXXL ) size human being decides to SLIM down dramatically and goes on a CRASH WEIGHT loss program. The commonsense tells us that he will SLIM down alright but in the process also runs the risk of crashing his/her heart. A gradual weight reduction is always the best advice which also leads to a long term weight control and a healthy system. There is no doubt that Britain risks losing it growth momentum due to the planned spending cuts, VAT rise etc. And it is evident from the Bank of England recent downgrading of UK’s growth forecast for the FY 2010 the bank also raised its inflation expectation for the next year in its recent published quarterly growth and inflation forecast.

Staying with the spending cuts here is an extract of what I wrote in one of my post titled “Stimulus: The Exit Strategy and the road ahead” in January of 2010. I think it is still relevant. “Although one understands that there is need to fix balance sheets (fiscal consolidation) and address the inflationary concerns by having a clearly formulated, defined and coordinated exit strategy in place. But that said Timing will be KEY here as exiting too soon or too late has its own risk. And also it is extremely important that the process should only begin when there is enough hard evidence to see that economy will keep growing on its own after the removal of the stimulus or in other words it is evident that the recovery is solid, financial markets are back to normalcy and credit risk spreads are at an acceptable level and there is a significant risk to inflation over the medium term” In the same post there is another interesting point that I thought I’ll share again. Here is an extract:

…one has to also admit that the policy makers have managed to avoid a Great Depression type event by not adopting an extremely tight fiscal and monetary policy but a single policy mistake here could jeopardize the whole recovery process.

I think it is important to point out that both the points are still relevant and we can only hope that the policy makers get it right and have a good foresight. Moving on it is no secret that the global economy is still very reliant on the US and going forward an underperforming US economy will reflect badly on the overall growth prospect. So let us check out how the US economy has been doing in the past few months.

The market was anxiously awaiting the Financial Regulation (FinReg) Bill so the biggest news coming out of the U.S. for some was the passing of the FinReg bill in July of 2010 that is supposedly going to prevent future CRISIS. Whether it does or not well for that we will have to wait and see. The FinReg bill deals with a number of issues. Some of the important one’s are Systemic Risk – Under the proposed plan the Financial Stability Oversight Council chaired by the secretary of the treasury will identify firms that threaten stability of the system and subject them to tighter oversight by the Federal Reserve; Ending Bailouts -Firms would have a mandatory “funeral plans” or a living Will that describes how they could be shut down quickly; Supervising Banks – the Comptroller of the Currency will take over from the U.S. Office of Thrift Supervision and the FDIC’s deposit insurance coverage will be raised to $250,000 per individual from the current $100,000 level ; Hedge Funds - All Private equity and hedge funds with assets of $150 million or more will need to register with the SEC and will be subject to more inspection. However, venture capital funds would be exempted; Insurance – A new federal agency/office will monitor the industry; Volcker Rule And Bank Standards - credit exposure from derivative transactions will have to be added to banks’ lending limits, Non-bank financial firms under the Fed supervision will now face limits on proprietary trading and as well fund investing etc; And Investors protection among others.

Now coming back to the performance of the US economy in the past few months, the recent data from the US has been mixed and also weak. So let us look at some of them.

We saw the U.S. consumer-price index increase by 0.3%, the most in a year and above the market expectation. The Commerce Department data showed retail sales excluding autos, gasoline and building materials unexpectedly fell by 0.1 % in July. According to Reuters/University of Michigan survey of consumers the preliminary index of consumer sentiment jumped to 69.6 following a reading of 67.8 in July, the lowest since November. Also the U.S. second quarter (Q2) GDP growth slowed to 2.4%.

Based on the recent data coming out the US it is safe to assume that the recovery is softening. Taking this into account the Federal Reserve has taken fresh steps to lower borrowing costs. In a recent statement the Fed announced that “ to help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities”. This is a significant policy shift as not long ago the central bank was eagerly debating the EXIT strategy from the huge stimulus delivered during the crisis. The Fed is also downbeat about the growth outlook going forward. A recent San Francisco Fed study suggests that there is a strong chance that the US economy will slip back into recession in the next two years. And to add to that according to the latest IMF’s annual review of the U.S. economy the fund observed that the U.S. fiscal gap associated with current federal fiscal policy is huge for probable discount rates.” And it claims that “closing the fiscal gap will require a stable annual fiscal adjustment equal to about 14% of U.S. current GDP. That basically translate into a constant doubling of personal-income, corporate and federal taxes as well as the payroll if the U.S. was to try to close the current fiscal gap from the revenues. So in short the country is living way beyond its means. Some would term this as a technical bankruptcy. Shocking isn’t it? But this depends on how you look at it. Remember the phrase when the U.S. sneezes the world catches cold well this still holds true so fear not. Also you go bankrupt only if others are not willing to lend you the money. It is in the interest of the world to keep the U.S. economy afloat and going forward it is highly unlikely that the foreign buyers of U.S. treasuries including of China, South Korea, Japan, Taiwan and others will abandon the US. Although the US economy has performed a bit below the market expectations it will be unwise to write it off and underestimate its ability to come back. But going forward there may be a significant rise in the poverty level across the U.S. and we are also going to see tax rises among other things. It is worth noting that the Fed’s still have ammunitions at their disposal but we will have to wait and see how effective they are going to be.

There is no doubt that going forward the policy makers in the U.S. will have to find ways to make sure that credit worthy small and medium size businesses have access to capital. Banks, companies and individual consumers are all economically inter-reliant. So if the financial institutions refuse to provide credit to good businesses because of the fear that other lenders will cut down as well. This will create a shortage of credit hence extending the CRISIS and delaying recovery even more. So how will all this reflect on the growth prospects in a wider context? There is no doubt that the emerging markets have been leading the way and in general investors have so far been more optimistic about the emerging markets than the US or Europe. Also it is interesting to note that the performance of the Asian indexes has been reflected in the US and other developed markets. And the demand side of the story has been mostly driven by Asia especially China. Although all the recent data suggests that the economic activities in major Asian economies like China is moderately slowing down that said China, India, Indonesia and others have a lot of growing to do. And going forward a big chunk of the global demand is going to come from the developing world especially China and India. According to the Washington based Inter American Development Bank (IADB) the total economic output from China and India combined together is expected to be around 10 times bigger than Europe’s total GDP by 2040. While China is already a leading trading partner of most developing countries as well as developed nations across the world, India is now adding to the demand side. Going forward India – a commodity hungry country, may very well become a key demand side client for commodity driven economies like Latin America.

Also the economic growth outlook for Africa is improving and going forward the region does have the potential to become a significant growth provider. And it is in the interest of the world to foster growth in the region. The policy makers especially in the developed world should look at Africa as a prospective vibrant market that will create demand and work towards creating a long term partnership with the region. Some European companies especially Portuguese are already tapping into Africa and generating more than 50% of their revenues from the region thus compensating for the loss of revenue from their domestic market.

This is why I keep saying to my friends and colleagues that the fear of double-dip might be good for the markets in the long run as it will keep the policy makers awake and alert fearing a policy mistake here could jeopardize the whole recovery process and the global community will blame them for it. That’s the fun of living in a globalised world where your problem may become mine sooner or later. Also I am starting to think that this CRSIS is an opportunity to rebalance the world and comparing this crisis to the past recessions and deploying the old rules of thumb is probably unwise as today we have a number of other factors including of a very vibrant emerging market that could influence the outcome.

A friend of mine once told me Positive Attitude is the MANTRA for success.

Now some may say being positive is good but one has to be a REALIST too. Isn’t that just COMMON SENSE or maybe not. I believe human psychology plays a very important part in whatever we do as humans. And I do mean everything relationship, business, career etc.

Let us explore this more shall we?

Most of us who operate in the market or just watch the market have witnessed the markets going UP on bad news and vice-versa. And sometimes the strength of these irrational or unexpected moves will make you want to lose all your foresight, judgement, wisdom and commonsense. You will be tempted to abandon your own view and just follow the trend.  There are some who do follow the trend. And there is nothing wrong with that. You don’t need to beat the market consensus but just profit from it.  But sometimes bucking against the market consensus does pay well in the end.  We all know that the markets have a habit of getting either too optimistic or too pessimistic and this has a lot to do with the market psychology. 

Understanding the market psychology and how it affects the markets is never easy. But you can position yourself and also profit from it by simply looking at the bigger picture and not get carried away by the market sentiment.    For example there were folks who went into the CRISIS uncertain about the future and with a very negative frame of mind (who would blame them) but there were others who went into the CRISIS knowing well that eventually things will get better and thus had a POSITIVE frame of mind. In the aftermath of the CRISIS all the evidence shows us that the later did profit from the CRISIS and are better for it.

Things are looking and getting better. Across the globe (with the exception of few countries) in general we are seeing a positive turn in the inventory, the manufacturing sector is beginning to do better, exports are doing well, businesses are beginning to spend some money, we are also seeing signs of improvement in the job markets, consumer and business confidence in the future seems to be getting better and one could say that we may have turned the corner. Having said that we may still see some mixed numbers going forward and although the overall health of the economy is getting better it is difficult to say with certainty that we are heading into a self sustaining recovery especially in the developed world until we start getting hard evidence that the private sector has started driving the growth.  But based on the current state of the global economy where we are getting more positives then negatives I think it is safe to say that there are no tell tale sign or risk of a double dip recession going forward and the global recovery is gathering momentum with Asia leading the way. As I have said before in my post titled “Coming of Age: Emerging Markets – The Next Generation of Growth Engines “. A post that I wrote in July of 2009 the party is in the Emerging markets.

There is no doubt that the policy makers have managed to avoid a Great Depression type event by not adopting an extremely tight fiscal and monetary policy. Keeping a loose fiscal and monetary policy has surely helped. But that said the overall cost of the CRISIS on the Governments has been enormous as evident from their fiscal position. Their balance sheets are too stretched and they are getting calls from all the quarters to take immediate steps to FIX it.  Although one understands that there is an immediate need to fix the balance sheet and also address the inflationary concerns by having a clearly formulated, defined and coordinated exit strategy in place. But that said the Timing will be KEY.  I believe the policy makers would like to see credible and hard evidence that that economy will keep growing on its own after the removal of the stimulus or in other words it is evident that the recovery is solid and sustainable. And this is why I believe the chances of a double dip are now becoming extremely remote.  But that said there are still many challenges that lies ahead and any policy mistake here could jeopardise the whole recovery. 

Although policy makers have done a good job but there is a lot that could go wrong especially if they start playing politics and listening to the popular demand. We also have the general election related uncertainties especially in the UK.  Governments are facing resistance from their citizens and labour unions on the austerity program designed to cut the huge budgetary deficit as evident in countries like Greece and other parts of Europe.  For example in Britain which has seen the worst recession since the World War II people are showing little or no appetite for the shrinking of a system that takes up almost half of the national economic output which is far greater than that of Greece, Portugal or Spain.  And all the political parties are mindful of that. So it is hard to envisage a situation where any government trying to come to power will promise the market a severe cut in the overall public spending and take radical steps to reduce the budget deficit even if they know that the markets may punish them for their inaction.

We are already seeing that European governments are taking decisions that are mostly political by design and targeted towards pleasing their own local electorate as evident from the stance taken by the German Chancellor Angela Merkel on Greece and the EU.  The message from the German Chancellor couldn’t be any clearer. It looks like if the EU nations want a currency Union with Germany then they will have to implement economic and budgetary changes and maintain a good fiscal discipline that brings their performance into alignment with Germany. Which is probably as a fair expectation but although the German proposal especially on Greece was approved by the EU countries however, it does make the future of European Union look somewhat uncertain and also undermines the common currency. No wonder why some the recent statements of the German Chancellor have been received with horror in most parts of Europe. But that said there is a merit in the German proposal especially if you look at how the EU has failed to supervise and monitor Greece effectively. At least with the IMF involvement and it playing an important role the markets should get some comfort knowing well that it will now be extremely hard for the Greek government to misrepresent the figures going forward and there will be independent supervision of the reforms and cuts proposed by the Greek Government. So a combined EU and IMF solution for Greece albeit perceived as political by the market may turn out to be a much better solution than the initial proposal. 

However, there is a genuine fear in the market that since Greece was not guaranteed explicitly by the EU there is a strong chance that Portugal , Spain or Italy won’t be helped either.  And if the EU is unable to fix its own problem or find an EU based solution for an EU problem then it surely reflects badly on the credibility of the whole European Union and undermines the common currency.  Also if the IMF decides to create a deeper austerity program for specific EU nations this may have a negative effect on the overall demand within the Euro Zone.  Which can’t be good for the German export industry but we will have to wait and see.  It is important to point out that to its credit IMF has shown a lot of flexibility when dealing with governments during this CRISIS so one can hope that we may see a sensible plan and in case of Greece they may even agree to the Greek austerity plan created by the Government.  But there is no doubt that speculators would surely try to benefit from this uncertainty by testing the market.

On the other hand we have seen the US dollar benefit on the back of the uncertainty in the EU and also the improving economic conditions in the United States. Central bankers (especially in Asia) and investors who were reluctant to buy US dollar few months ago have all of a sudden found a renewed attraction to the currency.  We have been long on USD and I am glad to say that our bets against EURO and British pound have paid off.  The reality is there is still a dark cloud of uncertainty hanging over Euro Zone and the UK which won’t help the EURO or the pound in short term and It is also very plausible that FED may start raising rates as early as third quarter of 2010 while ECB and Bank of England may have to wait a little longer.  And to add to that the upcoming elections especially in the UK are not going to help the situation. Having said that one could see the merit in the case for British Pound being undervalued especially against EURO, however, it will be hard to find a backer for British pound in the market.  But I believe a cheap pound is a blessing in disguise and it could in fact help the UK economy going forward. Although some in the markets may still hate the UK but we have had a different view based on common sense and reality. I am glad the market in now paying a lot of attention to the UK job story which I have been watching for the past six to eight months.  Here is an extract copy of the e-mail that I wrote to a dear friend ( I have edited the content and removed his name for obvious reason ) on the 20th of January 2010. I thought it will be an interesting read.

Hi D,

Hope you are well.

Picking up from our last conversation on the status of the UK economy I thought I’ll share with you and also get your thoughts on a piece that I am in the process of writing regarding the UK economy. I think bucking against the market consensus does pay well sometimes. We were expecting some positives numbers from the UK and I am glad that is what we got.

The Market probably still hates the UK and I can  understand the reasons for it but the market does have a  reputation of getting it wrong ( sometimes ) because we  as  people  do tend to get carried away and discounting  UK will be losing out. I won’t say I am turning all bullish but yes there are plenty of opportunities to make money spread across various asset/investment class.

Going forward I believe the market will start paying attention to the Job loss numbers in the UK surprisingly the job LOSS numbers have stayed well below the market expectation unlike any other previous recession? And I believe the main reason for that has been the flexibility offered by both sides the employees and the employers. And in terms of growth, going forward we could see a market beating quarterly GDP numbers and the reasons for that is simple we simple don’t know how much spare capacity is left in the economy and the inventories are so LOW that even with the existing and basic demand you will see a pickup in growth and this could PUSH the market up.

Cheers

I think it will be foolish to assume even for a second that the British economy is not in a pretty bad shape but I believe the market has been way too negative on the UK.  And we are already seeing some positive revisions in the official figures from the Government and government agencies. But that said the British pound and the economy will still be under considerable pressure for some time going forward especially because the UK economy is very closely linked to its banking sector.  According to Fitch ratings major UK banks may have to refinance more than US 448 billion of Government -backed guarantees and funding over the period of two to three years which could be a huge challenge depending on the prevailing market sentiment and this could reflect badly on the economy and the pound. What’s more the market is also very wary of UK’s budget deficit but one must add that this is not just a UK problem but today most developed countries including of the US are facing a similar challenge. 

Although one mustn’t underestimate the importance of shrinking the budget deficit to sustainable levels ASAP I think it is also important not to overlook a major problem facing all the developed economies going forward. Which I believe is a slow-motion train wreck and the governments would need to address it without further ado.  And I believe the Greek Crisis may be an early warning of troubles to come. The governments around the world especially in the developed world who are committed to providing very generous pensions over an extended period of time will now be pressed by the markets to re-examine or re-visit their pension program.

To get a perspective let us look at some of pension obligations of the developed world. According to a research recently published by Washington based Cato Institute if the Greek government was to bring its pension obligation on to its balance sheet the government’s total debt in reality will be over 875 percent of its GDP which is over 7 times the official Greek Government debt level.  And France for example will see its total debt rise to over 549 percent of its GDP, Germany will see it total debt soar to over 419 percent of its GDP from the current level of just around 69 percent, and the US total debt will rise to over 500 percent of its GDP.  There are some economists who would argue that having the pension obligations on balance sheet is the correct and appropriate way to assess a country’s total indebtedness.  To service and fully fund these pension obligations countries (especially in Europe ) will have to aside at least 7 to 8 percent of its GDP which seems like an impossible task and not practical to say the least but I think it is important to add that United Kingdom has the most favourable demographic developments among other in the EU.

There is an immediate need to fix this hole. And unfortunately there is no silver bullet the solution will have to be a right combination of higher taxes, benefit reduction, and increase in the retirement age among other measures. Some countries have already started raising retirement age but that alone won’t be enough. There has to be a reality check and going forward we may see generous pensions scheme being shut.  Some pensioners have already found a solution by choosing to retire in emerging countries with a relatively low cost of living. And this could be a part of the overall solution.

Americans, Europeans and others living in the developed world are already buying a record number of second homes in developing markets although some of these second homes could classify as investment but some are genuine second homes so may be the government and the pension funds in the developed world could create and promote “ Retire in your second home initiative”. But for that to happen there will be a need to commit to provide and deliver the entire essential and necessary services and this will require investment in infrastructure and other assets to raise the living standards attractive enough for people to retire with comfort.  These assets could be co-owned and funded by governments and pension fund in the developed world in partnership with their counterparties in the developing world especially in Africa and Latin American countries which are seeing a steady decline in the population and are in serious need for investment in infrastructure and other areas to improve the living standards of the population.  Though this may not solve the problem but it could be part of the combined solution and will surely reduce the burden and stress on the entire system.

The reality is going forward the tax payers may not be able to take any additional burden and lenders no longer willing to fund the excessive borrowings. Going forward the markets would require and expect changes in government programs in order to keep financing the shortfalls.

And with regards to the market itself I am now of the opinion that just like our body the market has its own immune system which is mostly driven by confidence, investor’s sentiment and market psychology (the mood of the market). And a positive mood with a quarter of positive numbers could BOOST that immune system significantly which could translate into surprises on the UPSIDE. In other words it is similar to a doctor getting pleasantly surprised by a quick recovery made by the patient.  Also the placebo effect is well documented and I believe the positive Investors sentiment and market psychology has a similar affect on the markets. As we know Investor sentiments, confidence and market psychology do play a major role in moving the market both ways and why  shouldn’t they  after all the markets are made up of human beings and run by human beings so it will be affected by the human psychology.

A close friend and colleague of mine, Mehdi Farhadi, recently dropped me a line to say hello.  He simultaneously passed along one of his recent publications and asked if I’d be willing to share it on mybusinessmusings.com.  Without hesitation, I said YES.  You see, Mehdi epitomizes what it means to be a guru in the field of mergers & acquisitions.  While working together in Germany, back in 2008, on a major global transaction we frequently pontificated and debated various M&A concepts.  Strangely enough, it was a field of interest we instantly bonded on.  I vividly recall one particular discussion, which revolved around organic vs. inorganic organizational growth.  It was one of those pleasant conversations where we 100% agreed on all fronts.  Ironically enough, several years later, Mehdi has put together a great piece that took that discussion to a whole new level.  This article will actually appear as a chapter in a book he will be releasing in the near future called “Value in Due Diligence”.  Give it a read as the perspective is invaluable.  I especially love the chart he’s put together as it really tells a significant story.  Enjoy everyone and thanks for sharing Mehdi:

Business leaders strive for growth. Growth is essential to the well-being of companies. According to Ansoff (1957), “just to retain its relative position, a business firm must go through continuous growth and change.” Most companies consider external growth through mergers and acquisitions (M&A) – both asset and share deals - as one of the quickest ways to fulfil business growth objectives. Corporate marriages help companies to sustain profit growth and gain greater market share.

Acquiring all or part of another firm, however, is complex and fraught with risk. Extant research suggests that M&A transactions are seldom success-ful. Three out of four mergers and acquisitions fail to achieve their financial and strategic objectives (Marks and Mirvis, 2001) .
Frequently cited reasons for the lack of suc-cess are the inherent complexity in integration of or-ganisations in the post-M&A phase. Failure in identifying and realizing credible sources of synergies has been often blamed for disappointing results of corporate mergers. It is vital that acquiring companies pro-foundly understand all facets of the business of the target company, i.e. tangible and intangible assets, pre-merger working capital, future investments, pro-spective risks and eminent challenges.

For this reason, conducting due diligence investigations has been often of significant importance to merging corporations. Inter alia, the objective of due diligence efforts is twofold: 
(1) preparing post-merger integration plan and
(2) identifying operating costs and financial synergies. Evidently, though, internal growth following the post-merger phase is prone to be ignored in almost all takeovers and corporate mergers.

In our contribution, we argue that post-merger success ultimately (e.g. increasing shareholder value) occurs only as a result of a continuous internal growth of the combined post-merger organisation. We stress that successful M&A players develop sus-tainable internal growth after the integration phase. Simply put, they generate value, extend customer base, improve revenues, focus on existing and new customers, excel in customer operations and are successful innovators. In contrast, companies that are witness to transaction failure are not able to develop internal post-merger growth on the basis of the acquired capabilities. When they go through M&A deals, they purchase revenue streams of the target and destroy value. Ex-ante, they fail to achieve the strategic objectives underlying the rationale of the M&A option. Their post-merger integration plans do not transform the “pre-merger acquired capabilities” to “post-merger integrated competence.” At the same time, we accentuate that post-merger threshold capabilities permit internal growth following acquisi-tion games.

Post-Merger Organic Growth Dilemma
The illustration below (Figure 1) portrays the post-merger organic growth dilemma faced by many corporations. The hypothetical growth curves represent sales growth for three companies: pre-merger, “Company A” and “Company B” and post-merger, the combined organisation “Post-Merger Firm.” Obviously, Company A and Company B are in a position to grow before their involvement in the hypothetical transaction. At the same time, the following illustration suggests that Company A (acquirer) has been growing slower than the acquired Company B (target); Company B, therefore, can be seen as an attractive candidate. The hypothetical case implies two post-merger contingencies:
(1) inorganic growth following the post-merger phase or takeover
(2) reduction of sales.

Growth Due Diligence
Experience elicits that organic growth after a merger (“post-merger organic growth”) is evidently pone to be ignored by practitioners. It would be reasonable to assume that post-deal organic growth following an M&A deal are largely ignored in almost all transactions.

In our proposed contribution, we argue that during the due diligence audit and integration plan-ning stage the internal growth opportunities and related risks must be isolated and post-merger organic growth strategies need to be carefully crafted and masterminded. In this context, the main question is:  Why have practitioners and researchers not seen the importance of this imminent subject matter? In addition, we put emphasis on the following due diligence queries:

(1) what are the determining factors influencing organic growth of the combined organisation following a merger or takeover?
(2) What are the con-sideration for achieving post-deal organic growth following an M&A transaction?
(3) Why do compa-nies fail to sustain post-deal organic growth?
(4) How is a merger failure defined by practitioners and researchers, i.e. through shareholder value corrosion or improvement? Is there any implicit or explicit association between shareholder wealth and post-deal organic growth?
(5) Why do some companies suc-ceed in acquisition games and how is the success of a deal defined?
(6) Is there any association between post-deal organic growth and the success of post-merger integration? And most notably,
(7) what are the key considerations in Growth Due Diligence investigations?

While M&A programme leaders, legal advisors, auditors, tax advisors, strategy consultants, and investment bankers are routinely engaged in identifying credible sources of synergies and realizing them, neither researcher nor practitioners have ever addressed the important role of post-merger organic growth in corporate mergers. The insights shared in this paper draw on the authors’ cumulative experience both as scholars and practitioners of strategic M&A transactions; moreover, the study is based on a current quantitative field research carried out in the area of M&A at Henley Business School.

My heart was beating through my chest, and my mind racing.  The same thought kept replaying over and over again within my cerebral cortex:  “I’m not prepared for this meeting.  How did I allow myself to get into this situation”?  After my colleague and I entered the client’s palatial office, I calmly sat down and distributed the packet of information that we would be reviewing.  I was confident with the early part of the presentation but was struck with an escalating sense of foreboding as the conversation progressed.  His eyes said it all, but his words would remove any doubt:  “I was expecting something very different.  I am now stuck in the unenviable position of having to make a difficult decision…Either postpone tomorrow’s board meeting, yet again, or trust that this presentation will be properly fixed by tomorrow morning”.  His comments, coupled with my senior colleague’s less than stellar support, shook me to my very core.  I was thrown under the proverbial bus, and I knew there was no coming back from it.  Less than two weeks into a new engagement, I was surreptitiously rolled off the client.  Just like that…I was done. 

Never in my career had I experienced such a profound sense of failure and anger, in both myself and the project’s leadership team.  I cannot put into words just how deeply my confidence had been shaken.   In many cases, a consultant’s effectiveness is directly tied to his ability to exude confidence.  Had I lost my Mojo?  Had my personal brand been tarnished?  How could I recover from something like this?

Thankfully, I received tremendous support from a slew of colleagues.  They sprang to my aid with eerily similar war stories from their own pasts, and how they managed to overcome the adversity.  Strangely enough, the more colleagues I shared my story with, the more stories of commiseration I received in return.  I was blown away!  Why had I never heard of these stories before?  Well, to be perfectly honest, it’s just not something professionals feel comfortable opening up about to just anyone.  And you really can’t blame them.  What’s important to note here is that such failures, whether justified or not, happen to consultants a lot more than you may realize. 

The following guidance will help answer the following question:  How does a consultant mentally bounce back from an engagement failure?

Before I proceed, I feel it’s important to establish some context.  Although the focus on this article is targeting consultants, the guidance is applicable to all professionals.  I do find these tips to be especially critical for consultants given the unforgiving nature of the profession.  At its simplest form, a consultant’s success is mainly measured by how profitable they are over the course of a fiscal year.  This includes both sales and project delivery.  In order to do that, a consultant must always be on the hunt for their figurative food.  As you can imagine, this can be a challenging feat.  Successful client engagements can quickly build brand momentum for you, which can translate into getting staffed on new clients faster.  Unfortunately, the same holds true for negative client engagements, as the stink of a failed engagement can linger for a while and ultimately impact your ability to be included in client pursuits or even be staffed on already sold projects.  If you can’t get yourself staffed, then each day you’re on the bench, the less profitable you become to the firm.  Believe me when I tell you, it doesn’t take very long for your numbers to plummet if you get sucked into that vicious cycle.  Low profitability + negative perception = target on your back.  No one wants to be in that position. 

Five Steps to Bounce Back:

1.)  Embrace the moment:  There’s no way to sugar coat how it feels after a failure.  It’s just horrible.  Even if you wanted to circumvent your emotions, you won’t be able to do so completely.  So, embrace them!  It’s not that different from the grieving process.  Just let it run its natural course by clearing your mind the only way you know how.  It took me about three days to get over the initial shock.  I spoke with my mentors and spent time with my family.  Hitting the gym hard was my release valve.   

2.) Collect information:  In my case, the details regarding my abrupt dismissal were pretty clear; however, I didn’t leave any stone unturned.  I followed up with my engagement manager, partner and other colleagues to collect as many details as I could so I could better understand the “why” from everyone’s point of view.  Do the same wherever you can.  Collect the good, the bad and the ugly so you have a robust data set with which to work.

3.) Analyze your performance:  Begin analyzing all of the data points you managed to collect.  Remove the subjectivity from the process by answering the following questions honestly about your performance:  
     o Was your work delivered on time?
     o Were your efforts on or under budget?
     o Was the work scoped properly?
     o Was the work delivered at the level of quality required?
     o Were you responsive and effective in addressing all client needs?
     o Were you responsive and effective addressing all internal team needs?
     o Did you communicate effectively with both the client and your internal team?
     o Did you have a positive or negative relationship with the client?
     o Did you have a positive or negative relationship with your internal team?
     o Are there any other noteworthy items that may have cast a negative perception on your overall performance?

Organize your answers into any type of logical format with which you’re comfortable.   Provide supporting examples to compliment your answers.  Once you’ve put your thoughts on paper, review your answers and highlight the areas where you may have experienced challenges.  Again, be honest with yourself! 

4.) Grow from the experience:  By putting your thoughts on paper, you have eliminated all ambiguity and only have the facts to consider.  The data can point to one or even many areas of deficiency, or none at all!  Remember, sometimes there are variables that are simply out of your control.    Acknowledge the areas you struggled in and think through what you could have done differently.  This exercise can be a difficult one, since sometimes the right answer isn’t obvious or even available.  I actually received some help with this process as I took my analysis to my boss for an unbiased perspective.  The self-introspection was very liberating.  My biggest takeaway:  Always bring a healthy dose of professional skepticism to new opportunities.  More to come on this in my next post:  The Resilient Consultant (Part 2 of 2):  Five Steps to Minimizing Project Failures.

5.) Get your Mojo back:  OK, so you’ve embraced the moment, collected information, analyzed your performance and grew from the experience.  Now it’s time to get back in the saddle.  You may still have with a little self-doubt lingering at this point, which is completely normal, but it will quickly pass once you knock the next one out of the park.  And you will!  The key is to take what you’ve learned and push forward.  You’re now armed with some very powerful experience.  Stay positive and get involved with client pursuits and engagements wherever you can.  Remember, you deserve to be there, otherwise you wouldn’t have been hired in the first place.  If anyone thinks differently, take that as additional fuel on your journey towards proving them wrong.  “Nobody can make you feel inferior without your consent.”  ~Eleanor Roosevelt 

My personal failure was a defining moment in my career, and one that I will never forget.  In retrospect, the experience forever altered my mindset and convinced me of one undeniable reality:  My career will always be a succession of lessons, which must be lived to be understood.  The following quote from the leadership guru Warren G. Bennis is eerily similar to feedback that I received from one of my closest mentors.  The essence of this message helped pull me out of my funk then, and continues to inspire me today:

“The leaders I met, whatever walk of life they were from, whatever institutions they were presiding over, always referred back to the same failure something that happened to them that was personally difficult, even traumatic, something that made them feel that desperate sense of hitting bottom–as something they thought was almost a necessity. It’s as if at that moment the iron entered their soul; that moment created the resilience that leaders need.”

I would like to close by pulling an excerpt from an article I wrote on the Consulting Career Path:  A Big Four Employee Perspective.  The quote is in reference to how I feel about the professional services career path:  “It’s a rollercoaster ride of unparalleled excitement one minute, which can be punctured by more sobering realities the next, all of which are experienced at break-neck speeds with little to no time to recoup.  I firmly believe it takes a special type of person to thrive mentally in such an environment.” 

One Final Note:  Approximately two weeks after my failure, I started a new project in Germany which would end up becoming the most incredible career and life experiences I’ve ever had.  Had I not been unceremoniously dismissed from my previous engagement, I would have missed the opportunity entirely.  Call it luck, karma, fate or whatever; I just don’t know.  What I do know is that I’m fairly certain I’ll be knocked down again in the future, one way or another.  With that said, I also know that I have the intestinal fortitude needed to get back up and fight with every fiber of my being to get my Mojo back.  Are you ready to get yours back?  Make it happen!

Although the economists still can’t agree on the real quantative impact of various stimulus packages that were adopted by economies from around the world but one cannot dispute the fact that the size of the stimulus did matter and did work in most cases.

To investigate this further let us look at the various stimulus packages that were adopted during the CRISIS.

Obviously by the sheer size and percentage of National GDP China’s US $ 586 billion stimulus Package which accounts for above 12.9% its GDP stands out from the REST. It is possibly followed by Saudi Arabia, Malaysia, and the mother of all STIMULUS thrown by United States under its American Recovery and Reinvestment Act of 2009 which is the largest by any measures (US$ 787 billion).

At the time there were market pundits who were debating the pros and cons and some even doubted if the stimulus packages will deliver and I am glad to admit that some of us including myself had a different view. Based on my judgement and commonsense I concluded in a piece that I wrote in March of 2009 titled “ Getting the Patient Out of Intensive – The Economy “ that it should deliver and put the US and the world economy back to growth. But having said we should have no illusion that the road ahead is still bumpy and uncertain.

In comparison to other economies most European countries with the exception of Germany and France have been reluctant to throw a bigger stimulus package (mostly because of their fiscal position ) with sizes between 0.3% of its GDP in case of Italy and 1.3% in the case of the United Kingdom. Germany clearly stands out with its two fiscal packages summing up to US $ 110 billion (approximately) which is 2.8 % of its national GDP hence it is no coincidence that Germany and France were the first EU nations among the EUROPEAN UNION countries to get out of RECESSION.

I think it is interesting and also probably important to point out that an unloaded stimulus with mostly tax breaks as the first wave of stimulus didn’t do much as evident from the one off tax rebate under the American Recovery Act of 08 of Bush Administration. It looks like the additional money was clearly used by majority of the Americans to pay off the existing debt. Also the experience of BUSH administration’s 2001 tax cut bill clearly shows that rebates generally wind up as savings or as debt repayment.

So taking the above into consideration economies like the US, Germany, Australia ,Spain and others who initially clearly favored tax cuts over spending in their respective first wave of stimulus packages in 08 decided in favour of an alternative measure that included more expenditure loaded plans in 2009 in combination with other incentives.

According to the IMF the total stimulus amounts to US $ 2 trillion ( approx) which is around 1.4% of the world’s GDP still below the IMF’s recommendation of 2 % of world GDP, however, only 15 per cent of the overall fiscal stimulus was really allocated for 2008 and the remaining 85% to be allocated over a two year period 2009 and 2010 with 48 per cent and 37 per cent, respectively. Also an important point to note is that while most of the Asian and other economies focused on their fiscal expansions in 2009, China’s and also the US the fiscal stimulus will only reach its PEAK in 2010. It is hard to accurately estimate to which extent the stimulus will be implemented in 2010 especially as the economies are stabilising and getting back to growth. And the recent downgrade of countries like Greece, Ireland, Spain and Portugal also means that going forward the economies will start focusing more on fiscal consolidation or else they run a huge risk of being punished for their inaction. The bond vigilantes are clearly BACK and they have all the reasons to be WORRIED.

Let us look at a list of top five debtor nations to get some perspective

1. Ireland - External debt (as % of GDP): 1,267%
External debt per capita: $567,805
Gross external debt: $2.386 trillion (2009 Q2)
2008 GDP (est): $188.4 billion

2. Switzerland - External debt (as % of GDP): 422.7%
External debt per capita: $176,045
Gross external debt: $1.338 trillion (2009 Q2)
2008 GDP (est): $316.7 billion

3. United Kingdom - External debt (as % of GDP): 408.3%
External debt per capita: $148,702
Gross external debt: $9.087 trillion (2009 Q2)
2008 GDP (est): $2.226 trillion

4. Netherlands - External debt (as % of GDP): 365%
External debt per capita: $146,703
Gross external debt: $2.452 trillion (2009 Q2)
2008 GDP (est): $672 billion

5. Belgium - External debt (as % of GDP): 320.2%
External debt per capita: $119,681
Gross external debt: $1.246 trillion (2009 Q1)
2008 GDP (est): $389 billion

I should point out that I’ve taken the above numbers from various sources including of IMF, World Bank and others.

It is a pretty Ugly reading isn’t it? The only good news is that it looks like the policy makers and the central bankers are beginning to take note of the worries and as a result have increasingly started to talk about creating a credible exit strategy as a priority.

Although one understands that there is need to fix balance sheets (fiscal consolidation) and address the inflationary concerns by having a clearly formulated, defined and coordinated exit strategy in place. But that said Timing will be KEY here as exiting too soon or too late has its own risk. And also it is extremely important that the process should only begin when there is enough hard evidence to see that economy will keep growing on its own after the removal of the stimulus or in other words it is evident that the recovery is solid, financial markets are back to normalcy and credit risk spreads are at an acceptable level and there is a significant risk to inflation over the medium term. We have already seen some of the central banks tighten in the later part of 09 and it is becoming increasingly plausible that others especially in Asia including of countries like India will follow suit as the real inflation starts to pick up.

Going forward the Central banks will need to explain clearly how they intend to use all the tools both conventional and unconventional that are available to them. But having said that, there is also a genuine fear that any preannouncement could possibly push the interest rates up prematurely thus derailing any chance of a ROBUST recovery. The Q4 of 09 and Q1 of 10 numbers should give us a good estimate of the strength of recovery. The economic improvement has to be across the board and not just in one sector to justify any intervention. We have seen some encouraging numbers reported from parts of the US economy in later part of 09 including of jobless claims falling to 432,000 - the lowest since September of 09 ,ISM Manufacturing Index rise 55.9 in December which is the highest level since 06, and also an improvement in business and consumer confidence etc but on the other hand the construction spending fell by over 0.6% in November of 08, US business loan defaults rose again in November of 09 and so did the US credit card debts write off. So we are still seeing some very mixed numbers come out which is what I have been expecting and this is why I keep saying to my friends and colleagues always look Beyond the Numbers, and dig deep.

I think it is extremely important not to overlook the human cost of this recession. According to the New York Times article dated 28th December 09, New York’s state courts are closing the year with over 4.7 million cases- the highest ever. The courtrooms are clearly seeing the aftermath of economic collapse on average folks on the main street and on businesses. I think from a judge’s perspective and also from the folks who are in the midst of all this it will be extremely hard to see signs of an ECONOMIC RECOVERY. But for some of the Wall Street guys it’s back to PARTY again as expected. I did write a piece titled “Investing in 2009: Back to Basics “ in Feb/March of 09 and I thought I’ll just quote the last paragraph. “The markets will come back at some point and there will be parties again on the streets, but the question is, will this happen again? I am sure it will. After all, we are human beings! “

Well, moving on even though we are still seeing mixed numbers I think it is probably safe to assume that we could see the US economy grow between 2.5% to 3.5 % in the year 2010. And the reason for that is the economy has to grow from a very low bottom so even with a very basic and existing demand the economy will grow. And also it is also very plausible that the US may outperform other developed nations including the EU. But the party is going to continue in the Emerging Market. And among the Emerging markets you would see economies with deeper domestic base like Brazil, India, Indonesia and Turkey do better than export driven emerging economies.

While we are busy talking about growth prospect of the global economy and the road ahead one has to also admit that the policy makers have managed to avoid a Great Depression type event by not adopting an extremely tight fiscal and monetary policy. Also there is no doubt that the stimulus packages have delivered as it is becoming increasingly evident from the performance of the economies like China, India, Germany, France and the US among others. That said there is no doubt that the road ahead is still turbulent and bumpy and a policy mistake here could jeopardize the whole recovery process. Monetary and fiscal policy changes will have to be coordinated. The main aim of any intervention should be to support growth and maintain price stability.

However, one of the safest open market operations could be raising the interest rate on banks’ reserves at the central bank as it will allow the central banks to mop up the excessive liquidity in the banking system by making sure the money is deposited back at the central bank and in so doing prevent excess credit creation and also inflation eventually. This is exactly what the Fed is intending to do through their term deposit program announced on December 28th 2009. The clear intention behind the program is to help mop up some of the $1 trillion in excess reserves in the U.S. banking system. While this should be easily achieved the unwinding of the assets bought by the central banks during the CRISIS will keep them awake. But that said it will depend on the timing, if they were selling to an extremely confident market they could even make money from the asset sales but let’s see.

And with regards to the performance/returns of various investment classes I think it is probably safe to assume that in 2010 bonds or any other investment class for that matter will not provide or duplicate the excessive returns as seen in 2009. And going forward we may very well see people chasing the higher yields again and get into more risky asset class. But, however, we may also see people jump back into safer bets like US treasuries if we were to have another Dubai type event so I guess a lot will depend on the market sentiment and confidence. There is still a strong demand for US treasury as evident from the weekly auction in December of 09. If you look at the corporate world you would see that most of them are talking about issuing more public equity to help repay the debt and strengthen their balance sheet. And if the fundamentals keep improving then it will lower the default rate but one shouldn’t underestimate the risk especially if you consider that down the road a rate hike is on the cards so bond holder should position themselves for what is coming. That said I don’t buy the argument that a total meltdown is coming in the bond market and everybody should get out because I believe if the economy grows strongly then it should withstand a hike. But for now let us hope the policy makers and central bankers get it right ……Fingers Crossed.

I tend to shy away from politically focused posts as the feedback is generally overly intense, sometimes irrational and usually futile.  It’s almost as bad as trying to discuss the perennially hot topic of religion.  The discussion always begins amicably enough, but it inevitably seems to devolve into senseless argument.  I think Oscar Wilde said it best:  “Arguments are to be avoided; they are always vulgar and often convincing”. 

After watching the recent State of the Union address (embedded below; please watch it if you have not…It’s worth it) I felt compelled to share a few thoughts, given that much of the  focus of the speech is centered on the economy.  A harsh reality is that politics and business are firmly joined at the hip, whether you want to believe that or not.  A clear example of this would be the special bond between corporate entities and career politicians.  How many times have you heard of “gray-area” reciprocities that have transpired over the past few decades alone?  You know what I mean – transactions that just didn’t seem to pass the common sense test.  Remember the cozy relationship between Halliburton and former Vice President Dick Cheney?  Wiki “Political scandals of the United States,” and you’ll get a flavor of just how extensive the list is. 

I know, I know … you’re probably thinking I’m heading down the path of “all politicians are criminals” stereotype.  That’s really not my intention here, so please bear with me.  We all know that political malfeasance is much more commonplace then it should be.  When was the last time you had that following thought running through your head after news of a scandal broke:  “Wow, I can’t believe he or she would do something like that”?  It’s almost expected these days.  The only questions are:  “How egregious is the act?” and “Will the public ultimately accept the indiscretion for what it was?”  It’s that simple; however, variables that dictate the public’s appetite for forgiveness is not.  Blagojevich = Bad, Clinton = Not so bad or even good.  Go figure.

Public scandal has always been easy for John Q. Public to judge.  It doesn’t matter if we’re right or wrong:  Perception has a tendency to prevail in the end.  What is difficult to judge is the inherently flawed underlying system.  It’s especially challenging if there’s never been a baseline or historic trend for comparison.  In an ideal world, our government would be composed of actual civil servants who genuinely care (at least in most cases) about the best interests of our nation.  It would be a role seen as a calling, not a career.  In such a systerm, where the public good takes precedent over personal ambition and a thirst for power, term limits would be unnecessary.  It would make perfect sense to keep sincere, red-blooded patriots in the House or Senate for as long as possible.  However, this ideal governance model has fostered the evolution of something sinister, but far less glamorous, than a juicy public scandal.  The output is an obvious deep-rooted polarization that has done nothing but enable complacency and prevent progress.   

A very close friend of mine captured the essence of my exact sentiment, which I’d like to share.  The passion behind his words are almost palpable.  Thanks for sharing Joe!

Joseph Rasamny:

“…I found myself just becoming more and more frustrated as I watched the state of the union address. I wasn’t so much annoyed with the president as with the entire situation this country is in politically, fiscally and intellectually.

In fact I thought that it was a solid state of the union, and I believe the president nailed on the head why true change is almost impossible today. America is in a perpetual election cycle, the media feeds on this cycle and the average person is bored of it. Both parties rely almost fully on a fanatical base and relish the status quo.

It used to be that the political pendulum would swing from left to right, and as it reached its apex on each side political and national progress would be made. Today this just doesn’t seem to be the case anymore; we are mired in the middle, neither party wanting to upset their base while at the same time trying to pander to the middle.

I am not sure what the solution is, or even if there is one, however what I do think is that we need an imposed term limit on the house and senate of a single term, no re-elections period. I think that is the only way to get the career politicians out and get true civil servants back in, people who truly want to help this country, not rob it blind.

He said he won’t give up, but sadly I think the people are.”

By now, you probably know a friend or a friend of a friend who has seen the blockbuster movie “Avatar,” a film that undoubtedly touts the creative genius of James Cameron, with a plot that seems to be universally appreciated, visually stunning cinematography and cutting-edge 3D technology that puts the proverbial cherry on top. Anecdotally, it just seems that moviegoers are actually excited about going to theaters again, a trend of which Hollywood is keenly aware.

As the “Avatar”-sparked 3D revolution continues to build momentum, I find myself asking a profoundly simple question: Is it sustainable? 3D has been around for a very long time. Yes, the technology itself has evolved in tremendous ways, but the original concept goes back over fifty years, not to mention there have been 3D resurgences in both the 50s and 80s. However, the spikes in usage during those periods were seen as gimmicks that quickly lost popularity.

In the January 6, 2010 Yahoo News article “Blockbuster ‘Avatar’ to accelerate 3D revolution”, the author states that “[a]ccording to organizers of a recent 3D film festival in Belgium, more than 150 3D films are currently in various stages of production. Among them is the long-awaited movie adaptation of comic-book hero ‘Tintin,’ directed by Oscar-winner Steven Spielberg and tentatively scheduled for release in 2011.”
It’s clear that Hollywood sees the current 3D revolution as an opportunity to accentuate the moviegoer experience and glean profits in the process. But I for one feel that the 3D zeitgeist will pass and ultimately succumb to one irrefutable principle: Technology without substance or meaningful content is destined for failure.

In other words, a bad movie is a bad movie, regardless of how impressive the 3D is. “Avatar” was a gamble in many ways – a staggering $500 million budget, no-name actors, and a sci-fi world that people were either going to love or hate. It just so happened that the film resonated with audiences in a very universal way. The film has grossed over $900 million in the foreign market alone. Do you really think that was attributed in any significant measure to the 3D technology? If technology was enough, then “My Bloody Valentine 3D” would have been box office gold.
Over the past decade, Hollywood has made a significant investment in promoting the 3D experience, the last five years alone having produced over seventy-five 3D films. Some notable 3D movie successes since 2004: “The Polar Express”, “Chicken Little”, “Monster House”, “Harry Potter and the Order of the Phoenix”, “Beowolf”, “Bolt”, “Monster vs. Aliens”, “UP”, “Ice Age 3”, “Harry Potter and the Half Blood Prince” and “Disney’s A Christmas Carol.”

What do all of these movies have in common? They are all good movies that appealed to the masses. The formula is that simple. The 3D technology may have played a hand in setting them apart a little bit, but it was the movie itself that appealed to movie-goers. I can guarantee you that the euphoria of 3D will be knocked down a few pegs once Hollywood experiences a few failed 3D experiments. Mark my words.
With that said, the technology undoubtedly enhances the moviegoer experience. I must confess that I found myself saying “wow” more than once during “Avatar”. The reality is that the technology will become more prevalent in the movie industry for at least the next 3-4 years, but time will tell if 3D has the staying power that movie executives are banking on. As I mentioned earlier, technology without substance is destined for failure.

One quick side note:
Back in 2003, James Cameron created “Ghosts of the Abyss”, which had a paltry $12 million dollar budget to “Avatar’s” massive $500 million cap today. How far away do you think we are before we see the first $1 billion dollar budget?

About a year ago, I was strongly considering the pursuit of an executive MBA to compliment my existing advanced degree in technology management.  I had been on the fence about the decision for quite some time.  Part me of felt as though my education would be that much more enhanced with the addition of those three little letters to bolster my resume.  Another part of me just felt as though I had unfinished business from several years prior.  You see, my graduate degree was comprised of about 1/3 of the standard MBA curriculum so I theoretically could have declared a dual degree approach.  But I didn’t.  At the time it just didn’t make much sense.  I had just landed a new job as a consultant and I knew my time would be very limited moving forward.   

As I revisited the possibility of heading back to school, an executive MBA was the only thing that might be able to comport with my hectic work schedule.  I decided to attempt to obtain firm sponsorship so my tuition fees would covered.  Unfortunately I didn’t make the cut as only 1 out of a little over 2o applicants received sponsorship.  This was at the height of our economic downward spiral so the outcome really didn’t surprise me at the time.  Trying to obtain firm sponsorship was even more challenging then the actual executive MBA application itself.  Not only did I need to provide a completed application that I’d be providing to the university I was applying to, but there were also series of other internal applications and recommendations I needed to provide.  It was an extremely painful process.

As you could imagine, the process left me with a number of completed applications; including my precious essays which would sadly never see the light of day.  Rather then cast them into the abyss of my My Documents folder, I felt that it might be helpful to some if I shared a sample essay response to one of the most commonly asked MBA admission essay questions.  The hope is that my personal style to the essay may help spark new ideas to help enhance your own response, and ultimately increase your chances of getting into the school of your dreams.  To be clear, this is not an approval to plagiarize the essay.  Writing an MBA essay for admissions is a profoundly personal activity.  It should reflect who you are, and not what you think the admission’s committee would like to hear.   

The following is one of the most commonly asked MBA admission essay questions:  Why are you an ideal candidate for the Executive MBA Program and how will your professional and personal accomplishments benefit your EMBA colleagues? 

Sample Essay Response (Written on December 2008): 

I feel I would be an ideal candidate for the executive MBA program for three reasons, which can be summed up with three words: Leadership, Ambition and Integrity. 

Leadership:
One of my earliest life lessons was never to pass judgment on someone’s motives or actions without a firm grasp on the relevant facts.   It’s a lesson that has aided me well in the business world.  I have received many such pearls of wisdom over my career.  They have come from all walks of life, such as family, friends, colleagues and mentors.  Early in my career, I received an important piece of advice from a colleague who remains to this day one of my closest mentors:  “You’ll work with many types of people over your career.  People you’ll like.  People you’ll dislike.  People who are talented or even brilliant.  People with hidden agendas.  People who genuinely want to help you.  People who are just incompetent.  People who love life.  People who hate life.  The important thing to understand is that you must adapt your leadership style in order to work effectively with all of them.  Observe their behaviors and take mental notes on their strengths.  Cast aside their obvious weaknesses.  Learn from those strengths and make yourself a better leader.” 

This advice continues to resonate with me and no doubt explains my tendency to observe very carefully the professional behaviors of those whom I encounter.  I feel this very inclination has driven me to become the leader that I am today in both my professional and personal lives.  Ernst & Young is a firm which prides itself in providing a platform through which its leaders can be cultivated to succeed in anything they choose to do.  I can attest to this strategic vision as I am a product of that very system.  Exposure to world-class clients, top-tier talent and limitless resources are everyday occurrences for me.  It’s a rollercoaster ride of unparalleled excitement one minute, which can be punctured by more sobering realities the next, all of which are experienced at break-neck speeds with little to no time to recoup.  I firmly believe it takes a special type of leader to thrive mentally in such an environment.

Ambition:
Ambition is a trait that someone is either born with or not.  I’ve heard this argument made many times in my life.  I firmly believe that this is a true statement, but I also feel that it is woefully incomplete.  All my life I have had the desire to be better or to win at everything I do.  Whether it was in sports or in the classroom, I always felt a profound internal disappointment if I did not come out on top.  The outcome always motivated me to work harder.  Was this a good thing?  For the most part, I feel it was, though my views on ambition have changed in recent years.  Ambition is a trait that someone is born with, but it must be fueled in order to remain sustainable.  Furthermore, ambition must never run wildly at the expense of others.  It must be controlled; if it’s not, it can quickly become a detriment to one’s career. 

I have made no secret of the fact that I have ambitions to reach a partner or c-level position in the future.  While I am confident that I will someday reach that level, I also know that career development is a critical process that takes place over time.  It’s a never-ending foundation of education and experiences that will prepare me for the right future leadership role.  The key is to funnel one’s ambition into concise actions in order to achieve one’s goals sooner than later.  This is a point that I emphasize when teaching or mentoring younger professionals.  In fact, I’ve followed my own advice by proactively pursuing superb professional experiences, building up my professional network, obtaining an advanced education and professional certification, joining multiple professional membership groups, researching and writing on business topics and, most importantly, absorbing insight from clients, mentors and colleagues alike.  I will continue to fuel my ambitions with deliberate actions.  To be clear, these ambitions have not been followed blindly.  I have not and will not jeopardize what I value most in my professional life, which is the final element I’d like to discuss - Integrity.    

Integrity:
It didn’t take a struggling economy created by corporate greed or malfeasance to tell me just how crucial the concept of integrity is.  Through the values that they raised me with, my parents taught me that lesson at a very early age.  My parents, who are immigrants, left a deep imprint on my character through their example, by the fact that they both worked hard throughout my childhood, taught me the value of a dollar and of making an honest living, by the fact that they not only managed to carve out a good life for themselves by making responsible fiscal and moral decisions, owning property and having savings, but also by sacrificing and providing an education to both their children.  These are things that every immigrant works hard to achieve but few ever really do.  It is an achievement that I marvel at to this day, and one which will continue to inspire my professional motives to take advantage and build upon the solid foundation they have laid before me.  Integrity is a mindset which I feel is woven deeply into the fibers of my very character.  History has shown us time and again just how critical this value is.  At the heart of the many tragedies typified by the Enron debacle lay leaders who possessed questionable moral fiber.  In the final analysis, these were leaders whose brilliant minds were surpassed by their arrogance, which in turn was only eclipsed by their ravenous greed to get what they wanted, no matter what the cost.

Integrity is a value I carry with me to every professional experience I encounter.  I try to make it a part of my character and not just a platitude I invoke whenever it’s convenient.  It is easy to pay lip service to the concept of integrity when one is not in any type of challenging situation that impacts him or her directly.  At times people will shift their behaviors and adapt to their environment in a negative sense, by losing or sacrificing core values in order to get ahead or reflect a certain cultural mindset.  In such instances, I often think of a quote from Viktor Frankl’s book, “Man’s Search for Meaning,” in which he said, “The last of human freedoms - the ability to choose one’s attitude in a given set of circumstances.”  I have been tested with numerous professional situations in my career where I chose to be fair and honest, though this choice did not always make me the most popular person in the room.  An example comes to mind where I was strongly encouraged, by a senior ranking executive, to provide official credit to a colleague for a business success with which that that person were not affiliated.  The encouragement was politically motivated to accelerate the advancement of that particular individual’s career.  I could easily have conformed to avoid conflict as the action would have been innocuous enough.  But instead I chose the path of ethical righteousness by choosing not to participate in the granting of an artificial accolade.  My decision was openly supported and respected.  Ernst & Young is a firm which genuinely preaches the philosophy to all of its employees that profits never supplant values.  It is for this main reason that I’m most proud of being part of such an organization.  It’s an environment in which I find great comfort.  It exemplifies the very same values my parents wanted me to practice in the life that I lead today.   

Conclusion:
As a prerequisite, I feel an ideal candidate must possess these three elements in order to succeed in your program.  The EMBA program, just like Ernst & Young, aims to cultivate seasoned leaders with high potential and to propel them to even brighter horizons.  I possess that seasoned leadership prowess.  Your program will undoubtedly require tremendous sacrifice, intellect and hard work in order to succeed.  I possess the focused ambition to do so.  Your program will demand a keen awareness of “gray area” business issues, issues that will need innovative solutions to avoid the moral dilemmas of tomorrow.  I possess the integrity needed to have this difficult discussion. 

My background touts a wide range of professional experiences such as small business owner, corporate professional, entrepreneur and global consultant.  Those broad experiences coupled with the elements mentioned above would foster a candid environment of knowledge exchange and innovative thinking which I feel would be extremely beneficial to any EMBA colleague.  I also feel my strong interpersonal skills would make it easy for students to approach me to begin discussion on any business subject.  My hope and expectation is that is that the EMBA program will enable its students to conduct these types of free-form discussions, as those perspectives are what I’m personally seeking to explore.

Developing countries’ share of global equity market capitalization jumped to a record 24 % in the first half of 09 from the past levels of 15% at the start of 07 as more investors flock attracted by the growth story.

Investors are now beginning to realize that developed nations are possibly faced with decades of very low growth and may need decades to work off the mountain of debt which is the biggest since World War II. According to IMF recent forecast the total debt of developed nations used to fund various bank bailouts and stimulus packages could reach above 113% of GDP by 2014. This is more then three times the estimated forecast of 34% for developing nations. Though one could argue that developed countries have had bigger debt burden in the past ( post World War II ) reaching close to 250% of GDP in case of U.K., and over 100% in case of USA but these debts were repaid pretty quickly. On the other hand, we have to take into account that developed nations recorded decades of high growth just after the World War II ended which allowed them to get their fiscal house in order. In the current circumstances it is highly unlikely that the developed economies will see growth levels of post World War II era going forward.

Developed countries are in a catch-22 situation if they spend more to keep stimulating the economy they risk running into a huge unsustainable fiscal deficit. The combination of low growth and ballooning budget deficit could be very damaging to developed economies. The talk of the town is now increasingly focused on getting the fiscal deficit under control. It looks like the Governments in the developed world have resigned to the fact that they are entering into a low growth era. World Bank is now forecasting the GDP of high-income countries to shrink by over 4.2% in 09 and the overall global economy to contract by 2.9% in 2009. In terms of regional growth the World Bank is forecasting the growth in the Middle East and North Africa to fall to 3.1 percent, while that of sub-Saharan Africa to drop to 1 percent from an annual average of 5.7% and the LATAM to fall to 2% however, East Asia should post a growth of above 5%. Although the report suggests that economic growth in emerging countries could slow to 1.2% in 09 China and India should achieve a growth of above 6% in 09. We must also add that one of most interesting growth area of the global economy could potentially be rural India with its 700 million plus population. Some companies have already started to focus on rural area of the Indian economy as they see a very bright growth prospect going forward. The recent Indian budget has rural India at the centre and it looks like the government of India is aiming to UNLOCK the growth potential of rural India which is most certainly a step in the right direction.

It is becoming more apparent that going forward the growth is going to come mainly from the developing world. The ongoing CRISIS will mostly probably be recorded by historians as the event that triggered a POWER shift. The developing countries are already asking for more influence, oversight and control over how the global economy is managed, supervised and operates. The industrialized world’s clout to impose its policies will only weaken from here on. G-7 countries are beginning to realize that their grip on global affairs is slowly waning and they will have to give away a lot of their influence and control over how the global economy is run but that said it will be unwise to assume that developing economies are ready to lead the world.

We are already seeing signs of what could possibly be a shifting world order. We saw Russia host the first BRIC summit albeit a symbolic one. China, the world’s 3rd largest economy seems to be promoting Yuan as a serious alternative to dollar and it looks like they have a Grand plan for Yuan’s role as a global reserve currency going forward. This is evident from People’s bank of China recent unveiling of rules on Yuan-settlement facility. The rules will apply to companies involved in trade with Hong Kong, Indonesia and Macau. As a trial the central bank is going to allow companies in Shanghai and four cities in the Guangdong province to settle their trades in Yuan with companies in Hong Kong, Macau and Southeast Asia. In a separate announcement on July 6 Bank of China signed clearing agreements for Yuan settlement in Shanghai with over 11 overseas banks, including Standard Chartered, Bank of East Asia and Bank Mandiri of Indonesia. As one of the major trading countries it makes complete sense for China to start reducing its reliance on dollar. Despite of the fact that the stage is being set to promote a real alternative to dollar by major developing economies including China, Russia, Brazil and now India one has to admit that in the short to medium term it is hard to envision dollar loosing its status as a global reserve currency.

However, more and more investors are getting attracted to the emerging market story and who would blame them. We saw the MSCI Emerging Markets Index rise by over 35 % in June 09, beating a mere 2.9 % rise in the MSCI Index of developed economies and increasing the value of stocks to $8.6 trillion from $5.1 trillion in 2008. We also saw the market capitalization of Brazilian equities reach close to US 950 billion while that of Indian equities reaching close to US one trillion and Chinese equities surpass the US 3 trillion dollar mark in June. It is becoming more and more evident that developing economies are now moving closer to the centre stage and it looks like the investors have formed an opinion that emerging market is where the PARTY is going to be and this probably explains why the Investors have poured in close to US 26 billion into emerging market equities in the 2nd quarter of 09.

Although one understands the euphoria but we should not forget the fact that we live in a very interlinked world and any country on a stand alone basis is not capable of growing in isolation forever. It has to be said that not all emerging countries will fair well, Latvia is a prime example, but emerging markets have mostly certainly come of age and going forward without much hesitation one can safely conclude that they are going to be the next generation of growth providers.