IILM Insights | June 2018

IILM Insights

June 2018

PG Convocation 2018 Prof. Sheth's lecture Faculty article Student article Alumnus proďŹ le (to be shared)

Prof. Jagdish Sheth

IILM Annual Convocation 2018

23rd Convoca on of the Post Graduate Diploma in Management with Chief Guest, Mr. Rajeev Dubey, Group President (HR & Corporate Services) & CEO (A er-Market Sector), Member of the Group Execu ve Board, Mahindra & Mahindra The 23rdIILM Annual PGDM Convoca on for the Class of 2018, held at the Lodhi Road campus on June 15, 2018, was for all the three campuses – IILM Ins tute for Higher Educa on, Lodhi Road, IILM Ins tute for Business and Management, Gurgaon, and IILM Graduate School of Management, Greater Noida.

The Chief Guest at the event was Mr. Rajeev Dubey, Group President (HR & Corporate Services) & CEO (A erMarket Sector), Member of the Group Execu ve Board, Mahindra & Mahindra Ltd. Mr.Dubey is a Member of the Governing Board of the Interna onal Labour Organiza on (ILO), Geneva, and serves on the Boards of the Interna onal Organiza on of Employers (IOE), Geneva and the Interna onal Training Centre of the ILO, Turin, Italy. He is also a core member of the Council of Global Advisors of the Yale School of Management (Yale SOM), and is the immediate Past President of the Na onal Human Resource Development Network (NHRDN), and the Employers' Federa on of India (EFI).

A er a career spanning 29 years in the Tata Group, which he joined in 1975 as a member of the TAS, the central managerial cadre of the Tata Group, he joined Mahindra & Mahindra Ltd. in January, 2004,. He completed his Gradua on in Economics from St. Stephens College, Delhi University where he ranked first in the University, and then his Masters at the Delhi School of Economics where he received a Na onal Scholarship. He went on to do his MBA from the Yale School of Management as a J N Tata scholar, and was selected as a Dis nguished Alumnus of the School.

Message from the Chief Guest, Mr. Rajeev Dubey: “I am truly privileged and deeply humbled to be standing here in front of you. In fact I am so humbled as to be rendered almost speechless…but I have to give a speech so I take courage from the German poet Wolfgang Goethe who had said, “Do not be so humbled Dear Sir, a er all you are not that great.” So taking courage from that, most humbly and respec ully , over the next 15 - 20 minutes, I would like to share some thoughts with you on crea ng tomorrow's leaders and very enigma cally, I am calling it “Crea ng Tomorrow's Leaders - The 3+5.

As we go along, I will demys fy what 3+5 stands for.

I know I am carrying coal to New Castle but it's important to know that there is a new normal in which tomorrow's leaders and tomorrow's companies have to operate. This new normal can be divided into two parts: One is called VUCA. I'm sure you are familiar with that acronym - Vola le, Uncertain, Complex and Ambiguous.

Everything is changing, what is right becomes wrong and what is wrong becomes right, what was up goes down, what is down goes up, etc.

In addi on to the VUCA world you have the phenomenon of a Countervailing Push back by all stakeholders, whether it be your customers, whether it be your own employees or whether it be the communi es you are opera ng in, stakeholders of course, governments - nobody is going to accept easily whatever you dish out for them.

So VUCA plus Countervailing Push back is the new normal in which all of you, tomorrow's leaders, have to operate. And the ques on that will face you and that will face any organiza on is -How do you create sustained out performance? That's the ques on I will address through the 3+5.

Note however, that in the new normal, you cannot have a sustained out performance unless you make sure that you do two other things - one is to show extreme care for all stakeholders and the next is to nurture and nourish your own core values and the core values of the organiza on. In any situa on there are at least 3 basic ques ons, Philoso phiaperennia. They are: what I do, how I do, & of course before that why. But what I have discovered in 44 years of corporate slavery and my 64 years of life on Planet Earth is that the answers to these ques ons actually stem from knowing the answers to the ques on, who am I or, from the point of view of the organiza on who are we.

Dr. Smitha Girija addressing the student and parents

For the purposes of my 15-20 minute discourse, I am not going to address issues of strategy, structures, processes and matrix. They are all absolutely necessary, don't get me wrong. You cannot execute without them.

You cannot do anything without them. My point and my focus is to say that while they are necessary, they are not sufficient for crea ng great organiza ons and for crea ng great leaders. The source of the greatness, given strategy, structure, processes and matrix, is the Human Being.

So I will talk to you from the point of view of human beings -I and more importantly, We. So the most important thing for tomorrow's leader when they want to start anything is to have a purpose -a Dream. This has to be a higher order dream. The purpose cannot be to make more profit, or to grow the top line. Those are necessary.

Of course we need to do that too achieve our KRA's.But we have to be led by some higher order purpose. That is really important because at the end of the day it is the purpose, the dream that keeps us going. It is this dream that comes to our rescue when the chips are down and please believe me, you will definitely encounter failure.

There will definitely be points in your life where you will really be down. And then it is your dream and your purpose that will pick you up. This dream must be a higher order dream. What kind of dreams am I talking about?

“Workers of the world unite, we have nothing to lose but our chains”. “Do or Die”.These were great slogans by Karl Marks and Mahatma Gandhi. Now in Corpora ons, you may not have such drama c dreams. You should have! There is no reason why you can't have such dreams. But you need to be li le stuffy, so maybe you could have some higher order thing like we have in Mahindra. I don't really want to tell you too much about Mahindra, that's not the idea, but just to give you an example of higher order purpose - it could be something like “We will challenge conven onal thinking and innova vely use all our resources to drive posi ve change in the lives of our stakeholders and the communi es across the world to enable them to rise”. This is just an example. The important thing is to have a dream, enunciate that dream and make that dream come alive each me you are in need, and each me you are down and each me you need guidance. So the most important thing – purpose or dream. Now to achieve your core purpose, clearly you have to do business transforma on.

You cannot do business transforma on in an organiza on unless you have a cultural transforma on. And I would like to propose to you three basic principles that will enable any kind of cultural transforma ons to achieve the business transforma on that you need to achieve your core purpose as tomorrow's business leaders.

These are three views of the world. And they are the three of 3+5. These are the three a tudes. What are they?

1.

Accept No Limits 2.

Do Alternative Thinking 3.

Drive positive change by what you do and what you think Above all drive posi ve change in yourself, in your teams, in your organiza ons, in your communi es, and in your na ons. So these three pillars should be there. At the core of what I am saying about these three things is the idea of unleashing untapped poten al and doing that by empowerment and by crea ng shared value. Now each of these terms could be elaborated further but I don't want to do that. I just want to leave an impression with you. Unleashing poten al and doing so through empowerment and by crea ng shared value.

Let me now move to the 5. These are five leadership behaviours or characteris cs which I believe will, if lived, enable the three views of the world that I talked about come to life seamlessly and effortlessly, given strategy, structure, processes and matrix. What are the five characteris cs of leadership behaviour?

1.

Ability to use the Whole Mind: In the new normal, the key to the kingdom to come will lie with those people who can effortlessly combine the le brain which is the brain of logic intellect, ra onality and programming, with the right brain, which is the brain of intui on, connec on, empathy, connec ng the dots, being able to see the big picture. It is those leaders, who in any situa on effortlessly and seamlessly have the ability to use the whole mind, combining le and right, who will hold the key to kingdom to come.

2.

Multiplier: The next behaviour, I call it Mul plier. So the mantra in the new normal will be to do more with less. To do more with less you need Mul pliers. Mul pliers of what? Of Energy, of Passion, of Engagement, and of Crea ng a sense of ownership. What kind of leaders are Mul pliers? Let me tell you that there are leaders who are Diminishers, who are the other end of the spectrum and these are the extreme command and control types. I have all the answers and you do what I tell you to do! Such people diminish engagement, involvement, and ownership. It used to be the military style model, the industrial age model, the kind that I was brought up in -Do whatever the leader tells you to do. But in the new normal it may not work. The new normal is too complex. So you need people who are Mul pliers. And who are Mul pliers? These people, who are as smart as Diminishers, but they respect the views of others. They listen to the voice of the consumer, the voice of the employees, the voice of the winds of technological change, and they focus on asking the right ques ons. They are not obsessed with the need to show that “I am the smartest here, I have all the answers”. They are more concerned with asking the right ques ons, co-crea ng the answers with their teams, and then ge ng joy in seeing the thousand flowers bloom. They are opposite of command and control and the“I am the best in the class” type.

Tossing the caps into the air!

3.

Managing Fear and Leveraging Failure: Third behaviour - I call it managing fear and leveraging failure. In the new normal, innova on is going to be the heart of the organiza on and innova on is going to be the big delivery that any leader has to do. How do you create innova on? By taking risk, by experimen ng. What is the biggest obstacle to risk taking and experimenta on? Fear. Now there are two kinds of fear. One is the fear we are all born with -it's the most powerful emo on in our lives and we struggle with this fear all the me. The other is the fear that a leader creates by his behaviour - any mistake dealt with severely and punished severely. If devia on from the norm is going to be punished so severely, why would anybody take the chance of doing something abnormal or something different, or going off the beaten path! If you don't do that, there is no experimenta on. If there is no experimenta on, there is no innova on. So experimenta on -create a culture where you are able to manage the fear and try something new. Now when you try something new, when you take the risk, by defini on at least 50% me there will be failure. My young friend said, “what ma ers in innova on is not how o en you fail but what you do a er you fail”. What do you learn from failure and how do you use the learning from failure to create success? In management jargon, it is the rapid prototyping, early failure, quick feedback loop and then get on again with your early experiment. So this is going to be the third cri cal behaviour -Managing Fear and Leveraging Failure. I want your permission to quote a few lines from, J K Rowling, the lady who wrote Harry Porter. This is a small quote from her Harvard commencement address about 8 years ago. Forgive me if you already know it. I quote, “It is impossible to live without failing at something, unless you live so cau ously that you might as well not have lived at all - in which case you fail by default.” The knowledge that you will emerge wiser and stronger from setbacks, that you will never truly know yourself or the strength of your rela onships un l both have been tested by adversity - such knowledge is a true gi . And even though painfully acquired, it has been worth more to me than any qualifica on I ever earned.

4.

Mindfulness: I come now to the fourth behaviour - Mindfulness. I have taken the courage of pu ng this down because I have heard it from the bas on of capitalism, a place called the Harvard Business School. The basic idea of mindfulness is being open to the possibili es that exist in any moment. If you are not aware of possibili es, if you are prisoner of your own past, you will never know what is possible because crea on comes out of the awareness of possibili es and people who are not mindful of what is around them are closed to the possibili es that exist and will never be able to create any transforma on or anything innova ve. You cannot be aware of all the possibili es if you are thinking about the past or dreaming about the future. Mindfulness requires us to be here and now, totally in the present, with an open mind, receiving all the things around us, being aware and then making a conscious choice of which of these possibili es you are interested in making into a reality. So mindfulness is about being open to possibili es, but by being here and now. I want your permission for one more quote: -

Look to this day!

For it is life, the very life of life.

In its brief course Lie all the veri es and reali es of your existence: The bliss of growth; The glory of ac on; The splendor of achievement; For yesterday is but a dream, And tomorrow is only a vision; But today, well lived, makes every yesterday a dream of happiness, And every tomorrow a vision of hope.

That's a poem by Kalidas. A simple exposi on of here and now.

Mr.Vikram Manocha, Talent Acquisi on Head, India, Amazon and IILM alumnus, being felicitated by Mrs. Malvika Rai

5.

Trust: I come now to the fi h, last but not the least. In fact, if there is one word that you want to remember out of my speech, it is “Trust.” Can the leader create a culture and atmosphere of trust where followers trust the leader and the leader in turn trusts the followers? How do you create an atmosphere of trust? Well the leader needs some technical competency of course! We have to assume that you don't make it to a leadership posi on unless you have technical competency. But actually more importantly, especially at very high levels of leadership, it is authen city. Do I say what I think? Do I do what I say? Is my thinking, saying and doing aligned? …again and again and again. It is if you like, about Walking the Talk - removing the mask and having the courage to be who I am, with my strengths and equally with my weaknesses and vulnerabili es.

Just to summarise there are the 3+5which make for tomorrow's leaders. The 3 are the three basic views: Accept No Limits; Do Alterna ve Thinking and above all Drive Posi ve Change. And there are 5 behaviours which will bring these three a tudes to life if prac ced and lived by leaders. They are: Ability to Use the Whole Mind; being a Mul plier; knowing how to Manage Fear and Leverage Failure; Mindfulness; and Crea ng Trust.

I now come to the last part. If I were wri ng an ar cle for the Harvard Business Review, I would have said, “tomorrow's leaders are led by a higher order purpose and they combine knowledge which is Knowing with execu on, which is Doing within as pace of Being”. Business schools address the Knowing rather well, they try to address Doing too but ll now we are skir ng the Being part. But the Knowing and the Doing actually come from the Being so you have to align Knowing, Doing and Being. So, tomorrow's leaders are led by a higher order purpose and know how to align Knowing, Doing and Being, in pursuit of the triple bo om line of profit, people and planet. And doing that has to be in a manner that creates the passion in an organiza on, which will truly differen ate one organiza on from another. And to do these things without sacrificing three values, I call them Satya, Prem and Seva. Satya is truth - to speak the truth regardless of the consequences. Prem is compassion, the ability to put myself into the shoes of others and Seva of course, is a sense of service. Even as we take a look at the miracles that are bestowed upon each of us - we can see, we can walk, we can talk, we have hands, we have legs, we have clothes to wear, we have food to eat everyday, we have a roof over our heads, when we are sick we get medical a en on, when we die, depending on our religion, we will get a crema on or a burial. All these things that we take for granted are beyond the wildest imagina on of millions and millions of people in the world, especially in our own country. You just have to walk out into the street and see what people can't even dream of. We have it all and yet we want the next promo on, a bigger car, a bigger aeroplane! Yes, we must have ambi ons! Yes, we take, but even as we take we can give! Giving is the biggest source of joy, and by the way, it is a huge source of empowerment. It will energize you and give you the means to do what you want. So this is my one request to all of you people who are going to walk out of this wonderful ins tu on - you all are going to be leaders and remember Satya, Prem and above all Sewa. I want your permission for the last quote, Today is another perfect day, to defy the world's nay sayers.

Today, we will think bigger than our size.

Today, we will refuse to accept limita ons.

Today, we will not be held back by the past.

Today, we will focus on the future — and never, ever blink.

Today, we will break down another barrier...

Scoff at another conven on...

And use alterna ve thinking...

To solve another previously unsolvable problem.

Today, we will accomplish something astounding...

And in the process, change someone's life for the be er.

Today, we will set an example for the world With boldness, with confidence, with relentless op mism.

Good morning, today is another perfect day to rise.

With that I thank you all for listening.”

The address by the Chief Guest, Mr. Rajiv Dubey was well received by the audience.

Awards and Recognition During the convoca on, Diplomas and Cer ficates of Merit were awarded by Mrs.Malvika Rai, Chairperson, IILM Ins tute for Higher Educa on and by the Directors of the three campuses - Dr.Smitha Girija, Dr.Sujata Shahiand Dr.Taruna Gautam - to 354 students of the PG class of 2018. Mrs.Malvika Rai presented the Dr.Kulwant Rai Gold, Silver and Bronze medals to the meritorious students as well as to the overall performers. Winners of the Gold, Silver and Bronze medals respec vely for overall academic and co-curricular excellence were SanamVij, Udita Dewanand Manish Khurana from New Delhi Campus: Abhishek Badola, Sanghita Boruahand Kanav Goyal from Gurgaon Campus: and Charu Goyal, Monica Chandeland Vibhu Kumar Pandey from Greater Noida Campus. Winners of the Gold, Silver and Bronze medals respec vely for academic excellence were Roshan Roy, KashishHanda and Manvendra Singh from New Delhi Campus: Kanav Goyal, Arham Jainand Bhavya Paliwal from Gurgaon Campus: and Firdaus Shadab Alam, Neha Jainand Mitali Singh from Greater Noida Campus.

Faculty members were felicitated by Dr. P. Malarvizhi, Controller & Dean, IILM University, Gurugram and the Best Teacher's awards were given to six faculty members, two from each campus. Prof Rajkishan Nair, IGSM; Dr.VidishaVyas, IIBM; and Dr.Shivani Khurana, IILM-LR received the Best Teacher Award for Core modules.

Dr.Shyamali Satpathy, IGSM; Dr. SangeetaSumbly, IIBM; and Dr. Pankaj Rawal, IILM-LR were felicitated with the Best Teacher Award for Elec ve modules.

Mr.Vikram Manocha, Talent Acquisi on Head, India, Amazon, who is an IILM alumnus, Class of 1997, was felicitated. Addressing the gathering, he spoke about his experience in the corporate world and said, “I have learnt more from my failure and failures are more important.”

Annual Report The Annual Report, presented by Dr.Smitha Girija, highlighted the various achievements of IILM in the last one year, the most important being the launch of IILM University at Gurugram inaugurated by the Honourable Vice President of India, Shri M. Venkaiah Naidu, on 20th April, 2018. IILM University is a Liberal Arts University with a prime focus on Entrepreneurship, Innova on and Technology and a vision of being Global, Inclusive and Responsible Center of Learning with 4 Schools – Liberal Arts, Management, Technology, and Design and Fashion. The annual report men oned the introduc on of new specialized Execu ve PGDM programmes in CSR, Sustainability and Innova on in collabora on with UN Global Compact India; Marke ng and Innova on in collabora on with the Academy of Indian Marke ng, and Public Policy and Management as well as IILM's customized Training programmes for many organiza ons such as leading PSUs, Defence Ministry's Directorate General of Rese lement; IAS and IPS officers, and IBM and Concentrix.

Another landmark achievement of the past year was the conferring of the 11th IILM Dis nguished Global Thinker Award on Prof. Jagdish Sheth, Charles H. Kellstadt, Professor of Marke ng at Emory University, Goizueta Business School. To mark the Silver Jubilee celebra on, the first batch of 1994-96 had been felicitated by Mrs.Malvika Rai during a special Annual Alumni Meet.

Dr.Smitha Girija, Director IILM, Lodh Road, wished the students well for their future and urged them to par cipate ac vely in IILM as alumni and share their experiences with the future students.

The Convoca on concluded with the Na onal Anthem.

NEW CONTOURS OF MANAGEMENT: ARTIFICIAL INTELLIGENCE, INTERCONNECTED WORLD AND INDUSTRY 4.0 IILM University, Gurugram, in associa on with Global Compact Network India, organised a special lecture by Prof.JagdishSheth, Charles H. Kellstdat Professor of Marke ng, Goizueta Business School, Emory University, USA on 'New Contours of Management: Ar ficial Intelligence, Interconnected World and Industry 4.0'. The lecture was hosted at India Interna onal Centre, on 2nd July, 2018 from 5:30 PM to 7:00 PM. Professor Sheth has been conferred with the coveted Dis nguished Global Thinker Award this year in January and it was a great honour to listen to his thought provoking ideas again. The evening started with a short video on United Na on's Sustainable Development Goals (SDGs) and how Government of India (GoI) and Global Compact Network India (GCNI) work hand in hand to achieve the objec ves laid down by SDGs. This was followed by lamp ligh ng by Prof.Sheth, Dr.Bhaskar Cha erjee, Senior Director, IILM, Mr. Arun Singh, Ex. Indian Ambassador to USA, Mr. Kamal Singh, Execu ve Director, GCNI and Dr. Smitha Girija, Director, IILM, marking a formal start to the evening.

Dr. Smitha Girija delivered the welcome address. The thrust of her address was on IILM's dedica on to promote the SDGs through its associa on with the GCNI's Principles of Responsible Management Educa on (PRME), India Chapter. She highlighted that IILM is one of the three Business Schools in India to achieve the coveted Champion B-school status from PRME India Chapter and how IILM University is going to contribute to the SDGs by being a global, inclusive and responsible ins tu on.

Dr.Bhaskar Cha erjee, shared his thoughts next over the dais. He emphasised the global significance of SDGs and the role of responsible management educa on as the founda on to achieve those goals. He men oned that the SDGs had set a global agenda before the planet and we as en es of the planet have no choice but to stand by that agenda, for our own benefit. He highlighted that the performance of the world including India on the Millennium Development Goals (MDGs) was not sa sfactory as these goals only involved a dialogue with the government. The SDGs are fundamentally different from the MDGs, in that they are largely inclusive, involving all the stakeholders beyond the governments. The forma on of SDGs ini ates dialogue between governments of countries, private players and the educa onal ins tutes. The SDGs embrace associa on with anyone and any en ty that has an interest in making this planet a truly sustainable place to live in. The success of SDGs will largely be decided by India's commitment as a na on towards sustain ability, primarily because of the strategic importance of our na on in the global economy. He also emphasised that unless the progress over SDGs is monitored, we will not be able to achieve the objec ves effec vely. Hence, GOI through the Ni Ayog has developed an SDG index, where the department monitors India's progress over the SDGs. He concluded with IILM's commitment to take forward the goals of SDGs, by providing a pla orm to bring people to work together, through its annual conferences with select SDGs as the main themes each year.

Dr. Cha erjee's address was followed by Ambassador Arun Singh's talk on the need to have the appropriate mix of policies to push the SDGs and their agenda in the right direc on. He highlighted that this is an interconnected world and the efficacy of our decisions, including those related to sustain ability, is largely dependent upon the developments at the global front. And the biggest challenge for us is how to maintain the autonomy of our policies in face of the tremendous pressure that stems from the dynamics of interna onal trade and rela ons.

A er Ambassador Singh's address, it was me for Prof. Sheth's much awaited talk. He started his speech with his light and wi y humour. He began by explaining what he has coined as 4 ages of development – Industry 1.0, Industry 2.0, Industry 3.0 and Industry 4.0. Industry 1.0 was the industrial age characterised by economy of produc on. Industry 2.0 was the infrastructure age characterised by economy of distribu on. He men oned that the divorce between produc on and consump on started in this age and it is this divorce that has created more carbon footprint that anything else. Industry 3.0 was the informa on age which changed the way we do commerce. This age saw a rice in credit capital, internet and broadband usage and online ordering through various modes. At present, we are living in the Knowledge Age, which Prof. Sheth terms as Industry 4.0. This age is characterised by increasing usage of Ar ficial Intelligence, Data Mining, Business Insights, Big Data and increasing use of the social media. This is the age of Economy of Experiences, the experiences that are created through technological interven ons like block chain, cloud compu ng, etc.

Dr. Smitha Girija, Dr. Bhaskar Cha erjee, Prof. Jagdish Sheth, Amb. Arun Singh, Mr. Kamal Singh

Prof. Sheth men oned that the people of today are loosing their iden ty with their na on of birth, as they are increasingly living in what he calls The Facebook na on, which has no geographical boundaries. He also spoke about the dark side of internet as the people today like to live in a world of 'Virtual Reality', rather than actual reality. Other characteris cs of this age include the rise of room-mate na ons due to increasing AI interven on in all spheres of life, outsourcing at home, uberisa on of markets where people will not own but they will rent, no intellectual property rights thus making the legal profession obsolete, massive stranded assets of commercial organiza ons leading to over inflated balance sheets and public acrimony where separate personal and professional lives are no more a possibility. A er explaining what Industry 4.0 is, Prof. Sheth moved his speech towards what implica ons this age has on management. He men oned that management is all about governance and governance will have to move from its current state of hierarchical and external to a future state characterised by distributed and self-governance.

From management's perspec ve, Prof. Sheth highlighted 10 important points related to Industry 4.0. Human Capital will command a premium. Average wage hours have gone up with each industrial age and so will the case be in Industry 4.0. There will be a rise in contract work as autonomy and self-governance will become more important than benefits, thereby reducing an individual's obliga on to contribute to social security. Conscious Capitalism will be on a rise as the corpora ons con nue to shi from the loca on where they rose to heights to urban loca ons where money is more concentrated. Prof. Sheth men oned that it is not the corpora ons that corrupt themselves but it is the capitalism that corrupts corpora ons. Conscious capitalism will raise an emphasis on shared value crea on, mee ng the triple bo om line of people, planet and profit. There will also be greater empowerment with greater accountability for front line workers leading to a reverse pyramid, also known as servant leadership. Selec on will become more important than training. Social Media will replace the press media. This will have huge management consequences. People will be sure that their voice will reach masses as social media does not have any editorial control over opinions that are expressed. Revenue sharing will replace profit sharing. Prof. Sheth gave the examples of Uber and Air bnb to highlight how revenue sharing is

a more successful business model. Coach and mentor style leadership will replace authoritarian style of leadership. With a humorous touch, Prof. Sheth men oned that boss is hated at every level in an organisa on.

Hence, the bosses will need to subordinate themselves. CSR will become the new Corporate DNA. Many organisa ons have Chief Sustain ability Officers. Other organisa ons to survive in this age will have to take similar steps and become more conscious of their responsibility towards achieving the triple bo om line. Public Policy will be more strategic than public rela ons and external affairs. Organisa ons will need a Chief Policy Officer (CPO). The CPO will not only liaison between the regulatory bodies and the organisa on but will also be responsible for formula on of appropriate organisa on level strategies, which will be more robust. IT will be like breathing air. Drawing upon this analogy, Prof. Sheth men oned that if we will need clean air, we will need to clean our data. Prof. Sheth's lecture concluded with a summary of the above points.

This was followed by ques on and answer session. To Ambassador Arun's ques on on how poli cs impacts interconnectedness, Prof. Sheth responded that technology will be more powerful than poli cs. He drew an analogy between religion and poli cs and men oned that religion always survives transi ons provided it does not become supers on. Similarly, poli cs will have to be flexible to adapt to transi on from one age to the other. Prof. Rahul Mishra from IILM ques oned about the role of management educa on, in the light of increasing importance of technology. Prof. Sheth replied that the first year of our two-year MBA or PGDM programs will need complete radical restructuring as tradi onal economic theories are not relevant anymore.

Accredita on bodies like AACSB will play agreat role in transforming management educa on. There will be greater need to use blended teaching than tradi onal teaching. He gave the example of IIM Bangalore, which has 45000 students enrolled in courses that IIMB runs on the EDX pla orm. Prof. Sheth provided clarifica on on block chain and bit coin as a response to a ques on that was asked to men on about the advantages of block chain technology. He men oned that bitcoin is one of the applica ons of this technology. Block chain technology will be more efficient from cost perspec ve as it allows for distributed architecture. It will be used by enterprises especially for low value transac ons. Responding to the last ques on on how to create responsibility in this age, Prof. Sheth men oned that responsibility cannot be imposed but it has to be taken by people. Religion and culture make compliance a compulsion to prevent self-destruc on. In this age, people are looking for spirituality outside religion. He men oned that Tirupa Balaji Syndrome, where gold is donated in temples, will cease to work. Rather there will be more thrust on people like Sad guru or Baba Ramdev who approach spirituality from the perspec ve of becoming more responsible towards what is actually needed and will benefit not just ME but a larger sec on of the ecosystem.

The evening concluded with Vote of Thanks by Mr. Kamal Singh which was followed by a networking dinner.

THE FIFA WORLD CUP 2018 AND FINANCIAL LITERACY

We are in the midst of one of the most intriguing events in the world of sports. The fan frenzy is at its peak, the faces in the stadium are a true reflec on of the deep worship for the Gods of the game and there are so many such Gods! The celebra ons, dejec ons, and cheers are all very infec ous with the live streaming of the event providing a visual treat for billions of the fans across the globe glued to their TV sets. Readers, you must be wondering what the latest news from the world of football has to do with the topic of behavioral finance. You must be a li le confused. But wait, the reference is not uncalled for. What drew my a en on to the television set was the banner adver sement from Associa on of Mutual Funds in India, vying for a en on in the midst of the noise and excitement with the tag line that said “MUTUAL FUND SAHI HAI”. Incidentally, I was watching the game on a Friday night with a doctor friend of mine, who, a er seeing the adver sement tag line quipped, “MATLAB KYA HAI”. Imagine a successful doctor finding it difficult to make sense of “Mutual Fund”as a right choice (SAHI HAI)! This is the background that prompted me to share my thoughts on financial literacy from a commoner's perspec ve.

Although my friend's remark made me think, it did not really surprise me because we are a country where more than 95% of households opt to invest in bank deposits with virtually no inclina on to know about other investment alterna ves. We are a country where only 10% of the households are inclined to put their investment in mutual funds or stocks (SEBI, Nielson Report 2015). The report of SEBI men ons Life Insurance as the 2nd most favoured investment alterna ve followed by precious metals, post office savings, and real estate. A World Bank Global Findex database report of 2018 puts the number of dormant bank accounts to half of the total bank accounts in India i.e., 48% of the bank accounts in India are dormant which means that there was not a single banking transac on in these account for the past year. This figure is almost twice the world average of 25% for dormant bank accounts in developing countries. These reports cover the en re country - the urban and rural folks from diverse backgrounds, people from the mainstream such as my doctor friend, and the daily wage earner working in a field in the countryside.

The understanding of elementary concepts of personal finance or investment decisions is vital to making decisions on financial choice and to a ain long term financial goals. Ci zens who lack the skills to make wise financial choices with resul ng limita on on financial decisions will generally fail in terms of ge ng rewards on their investment decisions. This is referred to as financial illiteracy.

With this background it would be interes ng to look at the state of financial literacy in India, a promising economy that boasts of the highest GDP growth rate that puts her among the front runners in the race for progress in global economy.

Financial Literacy is generally assumed to be a very simple concept among ci zens with most of them expressing confidence in their understanding of its meaning. In prac ce, however, the concept of financial literacy is an intensely debated concept that has no widely acceptable and conclusive defini on. Financial literacy is a rela vely new concept finding frequent men on in academic literature post the new millennium.

Financial literacy is also casually or interchangeably used for financial competence or financial educa on.

However, financial literacy as a concept extends far beyond competence and educa on. The most acceptable defini on of financial literacy has been provided by OECD (2012):“A combina on of awareness, knowledge, skill, a tude and behaviour necessary to make sound financial decisions and ul mately achieve individual financial well being”.

Conceptually, financial literacy is a comprehensive outcome of how people deal with the process of their financial decision making while they try to achieve desired financial outcomes. This process involves not only number of skills but is also guided by the cogni ve and a tudinal elements. In various comprehensive cross country surveys across con nents, the OECD has applied a well-designed framework to measure the level of financial literacy among ci zens and ranked countries based on the survey scores of financial literacy.

The financial literacy measure of OECD (Organiza on for Economic Coopera on and Development) is the most accepted framework to look at the concept of financial literacy. The OECD framework measures financial literacy through a combina on of three different dimensions - Financial Knowledge, Financial Behaviour and Financial A tude.

Financial Knowledge A financially literate individual will exhibit some basic financial knowledge covering a range of financial topics including basic number skills, division, me value of money, concepts of simple interest, understanding of compounding, risk return, risk diversifica on, and basic infla on. These are some very basic concepts and do not require expert knowledge at all.

Financial Behaviour The manner in which an individual behaves in respect of his financial ma ers will impact his long term financial well-being. These behaviour a ributes are derived from how people behave while dealing with their financial ma ers and includes elements related to thinking before making a purchase, mely payment of bills, se ng long term financial goals, belief in budge ng, saving, and borrowing to meet regular expenses.

Financial Attitude A tude of individuals is vital for good financial behaviour. The faith or belief in longer term savings or financial goals as against short term gra fica on decides financial a tudes.

HOW FINANCIAL LITERACY IS MEASURED TO KNOW THE FINANCIAL LITERACY LEVEL OF INDIVIDUALS The OECD Measure of Financial Literacy framework a empts to measure financial literacy of ci zens through assessment of the following skill-sets on the three dimensions men oned above:

Assessment of Financial literacy on 3 Dimensions FINANCIAL KNOWLEDGE

Division Time-value of money Interest paid on a loan Calculation of interest plus principle Compound interest Risk and return Definition of inflation Diversification

FINANCIAL BEHAVIOUR

Considered purchase Timely bill payment Keepingwatch of financial affairs Long term financial goal setting Responsible and has a household budget Active saving Choosing products Borrowing to make ends meet

FINANCIAL ATTITUDE

“It more satisfying to spend money than to save it for the long term', I tend to live for today and let tomorrow take care of itself', Money is there to be spent'

Source: OECD INFE (2011) Measuring Financial Literacy: Core Questionnaire in Measuring Financial Literacy: Questionnaire and Guidance Notes for conducting an Internationally Comparable Survey of Financial literacy. Paris: OECD

Status of Financial Literacy Among Citizens- Global Perspective

The Standard &Poor's Ra ngs Services Global Financial Literacy Survey (S&PGlobalFin Lit Survey, 2015, h p://gflec.org/research/?item=7791) covered about 1,50,000 ci zens across 140 countries to provide a status report on global financial literacy.

The S&P survey a empted to measure financial literacy by conduc ng assessment of ci zens on four very basic ques ons on financial decisions assessing their knowledge of simple interest, understanding of concept of compound interest, infla on, and diversifica on of risk. The survey results are quite sobering. Globally only 1 in 3 adults are financially literate. The financial literacy is not only widespread; it is also present in varying degrees in different strata of the popula on. Countries with women and lower educa on respondents were more likely to report low financial literacy. The low financial literacy is true not only for underdeveloped or developing countries, and lower income groups, but low financial literacy is similarly prevalent in developed countries or among the respondents from the high income, high educa on category.

Fig-1: GLOBAL VARIATIONS IN FINANCIALLITERACY (% OF ADULTS WHO ARE FINANCIALLY LITERATE)

Source: S&P Global FinLit Survey 2014/15

Fig-2: WIDE VARIATION IN FINANCIAL LITERACY AROUND THE WORLD

60%

40%

40%

Major Advanced Economies

India

0%

China

20% Brazil

Japan

Italy

Germany

France

0%

Canada

20%

South Africa

60%

United States

80%

United Kingdom

80%

Russisan Federation

(% OF ADULTS WHO ARE FINANCIALLY LITERATE)

Major Emerging Economies

Source: S&P Global FinLit Survey 2014/15

Indian Perspective The major economies named BRICS (Brazil, Russia, India, China, and South Africa) do not do well on financial literacy with an average of only 28 % of adult ci zens being financially literate in BRICS. There is also a visible divergence on financial literacy that exists among these countries, for example, South Africa reports 42% financial literacy whereas India reports a mere 24%.

The Indian context presents a far greater challenge for the stakeholders including the Government, policy makers, public policy spearheads and the Central Bank, especially in light of the Jandhan, Aadhar, direct benefit transfer, cashless transac ons, and the knowledge of the fact that financial illiteracy is not only limited to resource poor, marginal popula on but also to the educated, financially capable, mainstream popula on.

Now that the FIFA World Cup is over a er many intense and exci ng games with finally France emerging as the World Champion, maybe I will get an opportunity to discuss the mutual fund with my Doctor friend and make him financially literate.

©Prabhash Chandra

GAME CHANGER DEAL : WALMART'S FLIPKART ACQUISITION -Neehal Vahora (SBS 2015-18 cohort)

DEAL

Walmart has declared its eagerly awaited arrangement to purchase a controlling stake in Indian web based business organiza on Flipkart. This is probably one of the greatest procurements for the US retail goliath.

Bentonville, Arkansas-based Walmart and its accomplice in the arrangement, Google parent Le ers in order Inc, will purchase up to seventy five percent of Flipkart. Walmart will possess an approximately 60 percent stake, while Le er set will get around 15 percent responsibili es for online commercial center, sources included. The arrangement may probably raise the evalua on of Flipkart, valued at approximately $18 billion to $20 billion. Amazon.com Inc, which has been discharging billions of dollars into India in order to dispatch products to customers faster and cheaper, had also made a formal offer to purchase 60 percent of Flipkart but it was Walmart that bagged the deal.

Indian Internet Business' Transition: Acquisi on of Flipkart by Walmart is an indica on of the transi oning of Indian internet business as well as a replica on of history. The US giant, Walmart, will devote billions to India because they see a massive opportunity, and this will deliver a temporary aid to Indian customers. With developing technology, the delivery of products is quicker and less expensive — and open to everybody across a huge geographical area.

New companies run by young entrepreneurs are always on the rise, giving tough compe on to exis ng players because of them snatching away a part of their market share. Speed and execu on are thus cri cal to business survival and intensity.

Innova on based businesses such as retail, hardware, and dissemina on that require extensive capital can disable the li le players since availability of cash gives a favorable posi on to the bigger ones. Amazon, for instance, has been losing cash, or procuring razor-thin edges, for over two decades. But since it was picking up the piece of the market pie and ge ng rid of its physical rivals, financial specialists remunerated it with a high stock cost.

Due to this enhanced capitaliza on, Amazon raised funds at lower interest rates and u lized it to further expand its market share. It also acquired many contenders but unfortunately with Flipkart it could not succeed.

As a leading player in the US e-commerce industry, Amazon has its eye on India with huge expansion plans.

Walmart too is chasing the Indian market. Both the giants are gearing up towards the end goal of possessing Indian retail and then spli ng the crown jewels between them. That is the reason controls are urgently required on issues like capital dumping although such controls probably won't decrease rivalry or regulate advancement but like it happened in China, they will begin a healthy rivalry resul ng in more innova on.

Facts about Flipkart: 1.

The organiza on was established in 2007 in the southern Indian city of Bengaluru by Sachin Bansal and Binny Bansal. The Bansals, who are not related, met in 2005 at the Indian Establishment of Innova on, Delhi. They are both previous representa ves of Amazon.

2.

Flipkart at first sold books, spreading to music, mo on pictures, recrea ons, gadgets and mobiles. The major book sold by Flipkart was John Wood's “Leaving Microso to Change the World”. Flipkart launched E-kart in 2010 and started its first cash on delivery service.

3.

It opened an office in Bengaluru in 2008 and workplaces in Delhi and Mumbai in 2009. Flipkart merged all its Bengaluru workplaces in a single large office.

4.

In 2011, Flipkart domiciled to Singapore hoping to charm investors to fund Flipkart's rapid growth.

5.

The ini al billion-dollar Indian internet business organiza on, Flipkart now offers 8 million items crosswise over 80 or more classifica ons. It has 100 million enrolled clients, 100,000 dealers, 21 distribu on centers, 10 million every day page visits.

Key Individuals in the Deal: 1.

In 2016, Binny Bansal took over Flipkart as CEO, and Sachin Bansal as Chairman. Kalyan Krishnamurthy, an execu ve from Tiger Global was the biggest investors in Flipkart.

2.

Binny Bansal became the Chief of the en re group, and Flipkart acquired fashion ecommerce sites Myntra - Jabong, payment division u lity app Phone Pe and logis cs firm E-kart.

3.

The organiza on's board has seven individuals. Dropbox Inc'sChief Technology officer, Aditya Agarwal, joined the board in 2014.

Mergers and Acquisitions: 1.

They bought online a re retailer Myntra in an arrangement pegged by sources at about $300 million in 2014, and another retailer Jabong for $70 million in 2016.

2.

Last year, Flipkart offered to purchase equal Snapdeal but the arrangement failed to work out. So Bank, Flipkart's biggest speculator, also has a stake in Snapdeal, as does China's Alibaba Gathering Holding Ltd.

3.

Flipkart purchased installment startup PhonePe in 2016. In return for a value stake in Flipkart, eBay consented to make a $500 million trade venture out and offer its eBay.in business to Flipkart in 2017.

Talks from Venture Capitalists: 1.

Japan's So Bank Gathering Corp possesses a fi h of Flipkart through its Vision Reserve. So Bank offered its en re stake in the Walmart bargain.

2.

Early financial specialists, New York-based hedge fund company Tiger Worldwide and U.S. private-value firm, Accel Accomplices, offereda dominant part of their stakes.

3.

Other investors involve the Founder and Napsers Ltd., China's Tencent Property Ltd. eBay Inc and Microso Corp contributed $1.4 billion.

Walmart and Flipkart have kept the Compe on Commission of India (CCI) informed about their exchange and have expressed that the applicable market for their merger would be in B2B deals. Walmart and Flipkart declared on May 9, 2018 that the Bentonville - headquartered organiza on will take control of77% of the Indian online business organiza on for $16 billion. The arrangement needs endorsement from the CCI. Walmart has been available in India just through its B2B discount business. The two gatherings said that the "proposed exchange does not offer ascent to rivalry concerns".

The organiza ons said that the "applicable market" for the associa on is the "skillet India showcase for B2B deals". The arrangement notwithstanding, it was required to bring Walmart's items, par cularly in FMCG, to Flipkart's entry. Flipkart India, the discount arm of the online retailer, cut its losses by the greater part to ₹244 crore while expanding its incomes to ₹15,264 crore for FY17.

Financials: (source: Business Insight).

1.

Flipkart losses a ributable to owners of the company in 2017 had gone up to 87.70 billion rupees, from 52.16 billion rupees per year sooner.

2.

Consolidated income rose to 29 percent to 198.55 billion in financial year 2017.

ALUMNUS PROFILE Vice President- Finance & Controlling at Piaggio Group, Pune, Maharashtra, India An astute Finance professional, NeerajGarghas two decades of rich experience in financial stream coupled with opera ons and general management experience across various industries viz. Chemical, Packaging, IT Hardware, Lifestyle Retailing, Electrical Automa on and Automo ve.

Neeraj Garg (IILM Batch 1996 – 98)

Currently working as the Vice- President Finance & Controlling for Piaggio Vehicles Pvt. Ltd., Neeraj earlier held the posts of CFO of a listed en ty of Schneider Electric in India & Director- Finance & Controls for GSC Opera ons in Schneider Electric India Management.

He has his eyes set on the focussed goal of heading a large Corpora on with diversified businesses.

With speciali es including, Team Management, Financial Planning & Analysis, Corporate Repor ng & MIS, Financial Controlling, Industrial Cos ng & Inventory Management, Capex Management, Taxa on & Compliance, Working Capital Management, Produc vity Enhancement, Cost Op miza on, Business strategy, and ERP deployment, he is certainly moving towards his aspira ons at a quick but steady pace.