Functionality is NOT the king!

I was thinking, what makes a product a hands down market leader and an also-ran. One thing I realised was that functionality is not the only criteria. If it were the same, FriendFeed would be much bigger than Twitter. Or for that matter, LinkedIn wouldn't be the market leader either. Or Google might have been oust by one of the many search engines that came up after it.
Same is true for mobile phones too. If functionality was the only criteria, the lot of "prettier" phones would have been replaced by the more "functional" ones. iPhone might just have gone extinct if it were only to be compared on functionalities with the blackberries. I had read somewhere that SAP proudly stated that they never show the product during the selling stage. Reason - because "nobody ever got sacked for buying SAP " !

The race for functionality is never ending. You could go on adding features to your product. It will never reach the marketing stage in this way. Functionality is not the main thing and the marketing people know it too! The product has to be only "good enough" on functionality. The rest is about the acceptability, portability and the perception. "If the whole industry uses SAP, then it must be good enough". "All my friends use Twitter, I don't want to use something else."

If it is all about functionality then it is an argument about diminishing returns, marginal differences and small variations. And often this is not nearly enough to win a client, cause a revolution, or shift opinions.


Frankly, as long as our needs (present, and foreseeable in the near future) are met, do we really care what more is on offer? After this point, perception takes over. If something is viewed as the "poor man's cow", it will not be bought by someone who wants to project a rich image. If google is the in-thing, why would someone use AOL?

The next thing is the change. The trouble of moving from one product to another. People love familiarity. Getting people to switch without showing them the huge advantages is not going to work. That's the reason that analysts claim that despite Wolfram Alpha's great features, it might not be able to overtake google. For the cost and disruptions would be too huge given the present slight edge in functionality.

Of modelling Human beings and pseudo random number generators

While have a chat with my friend Abhishek over my previous post on irrational behavior of humans, I started thinking on how and if humans can be represented by random numbers (Afterall each one us is unique and essentially random).

I believe (as do a lot of evolutionary scientists) that our reaction to any stimulus depends on a lot of factors, like the genes we carry, the natural environment we have lived in, the kind of thoughts we have, our experiences, stimuli from the recent past etc. Evidently, there are far too many variables that can affect our decisions.

So is there a way to this apparent madness ? Can we call these effects totally random? Abhishek sure seems to think so. But I doubt it. If everyone had totally random characteristics, then we would have had a zero (neutral) average reaction to any stimulus. But, on the contrary, masses behave more in unison. So the seemingly random "personality trait numbers" have a non-zero mean. But this mean can only be seen in a "large enough" group.

So can traits of human beings be thought of as being generated by a pseudo-random number generator? After all, these can have a mean, are random for all practical purposes but everyone knows that these have been derived from some determinstic method. I really dont know. But the idea itself seemed too good not to be posted

The naivety of the Indian energy policy makers

I just read this news on India proposing a new gas pipeline from Turkmenistan. The country is gas-rich and theoretically has a great potential to abate our energy crisis.

All of the less-informed, low-intellect, mortal, aam-aadmi know that you can NOT trust an Islamic militant country to protect our lifeline. But out dear 'IAS-babus' seem to know better.

I assume that their rational is that economic powers will keep the pipeline safe. But if they could not secure their pipeline to Russia, a fortnight back - I don't see how they can guarantee the safety of this project. Turkmenistan is riddled with foreign policy troubles - being bullied by both US and Russia while it tries to stand up to Russia with US aid. And the fact that it shares a large part of its border and culture with Afghanistan does not sound too well for the prospects of the pipeline. Any pipeline that goes through Afghanistan & Pakistan and comes to India just doesn't feel safe enough.

The incumbent energy policy makers probably were weighing only the economic benefits from the project when they decided to pursue it. But the fact remains that many decisions involve other considerations - especially those taken by extremists, value schadenfreude very highly. And to give them access to something that could staunch our economy seems particularly foolish -if not diabolical.

And aside from the militant threat, we would rather not be the proverbial grass (When two elephants fight, its the grass that gets trampled - African proverb) in the fight between Russia and US over the dominance in the region. US has been trying hard to cut into the soviet dominance in the central Asian region, and Russia is not willing to let go of its strategic buffer. And the fact that we have been "friends" with both of these countries while still managing to keep the other around means that we could be "reprimanded" slightly by either. Though I strongly believe that they would not want to curtail India - We are a big source of income for both the countries. But why give them an opportunity?

Logic of a "free" customer

For the past few days, I have been thinking about how much is a 'free' customer worth.
For example, All the social networking sites like Facebook, Orkut, MySpace offer free logins for anyone. Similar is the case for eBay.

For example on eBay, all buyers are free registrants . Only the sellers pay - and that too when they get a product to sell. This gives rise to an interesting situation - without 'free' buyers, there are no sellers - and without the sellers the revenue model fails.

Similar is the case with Orkut - without the free users, there are no ads, and hence no money. But its slightly complicated here as Orkut is owned by Google. so there might be opportunity costs involved. like for example, when someone clicks on ads by google from a third party site, google must be paying something to that site as well (as it does in adsense). So when Google values its Orkut users, it will also factor in these savings.

Facebook epitomizes this type of revenue model - it allows advertisers to select their target group very effectively. Allowing them to streamline their ad via features such as
* Location
* Age
* Sex

* Keywords
* Education
* Workplace

* Relationship Status
* Relationship Interests
* Languages



But exactly how useful are these customers? there might be some customers who never click on any ads. Or for that matter, sell products on eBay. So these people never make money for the company. On second thoughts, these might still generate some revenue for eBay - by increasing the selling price through competitive bidding.


This thought cropped up in my head while listening to a presentation on the revenue models followed by browsers. Since then I have not been able to stop thinking about it. So HAD to publish it. Anyone who has some idea on this, please do comment/ contact me. I wish to learn more about this fascinating concept.

How frank should our leaders be?

Last night I read Mohinish Sinha's article on leadership. It talks about a situation where leaders dont either see the bad picture (due to their own rosy glasses) or dont want to let it out in the open lest everyone else comes to know of it. He says "...Leaders, whose self concept is brittle, hesitate to call the truths lest they will be found out. ..."

However, as I see it, there is another side of the story. As he writes in the preceding line, " Organisations tend to mimic the behaviors of the leaders at the top." So a leader might want to shield the bad news from the employees - just to keep them motivated. This, however noble it appears, is not without its flaws. A leader has to be able to see the whole picture, and know the short-comings well. So even if the bad news is not let out in the open, it has to be dealt with - firmly.

HBS too had a similar article/ opinion poll sometime back. They talk about the National leaders during times of crisis. The question posed is if or how frank or deceptive should the leaders be during crisis. The leader showing negative sentiments is not a good sign and it tends to reduce the general morale. However no one wants a leader who lives in a cocoon of self-deception and believes that everything is fine.

As is reported elsewhere, about 70% communication happens via non-verbal means. So the self-deceptive will come out as more natural and more convincing while the one who understands realty will show some signs of distress. But human brain is pretty good at understanding cues from fellow human beings. We can understand if someone is in a slight distress and still very optimistic. Most people would trust such a person more than someone who shows no signs of crisis.

Irony - as (or do ) we understand it

I had heard this classical hindi song called "पानी में मीन प्यासी | मोहे सुन सुन आवत हांसी ||..." - when I was kid - when translated to English, it reads "I find it really funny that the fish feels thirsty despite being in water..." . It somehow surfaced from my subconscious to the 'everyday-mind' a few days back. And from there on, I could always recognise some irony that reminded me of the song.

The fact is that we are so obsessed with our own understanding of the world and its accompanying prejudices that we tend to ignore/discredit things that do not fit into our instinctive model. Like the other day, I was talking with my friends about the potential for extra-terrestrial life - and almost everyone seemed to believe that they will need an organic photosynthesis (or its sillicon analogous compound). But why cant it be that case that they derive their energy not from a external sun- but from its core itself. We tend to ignore this possibility simply because we assume that life will not be sustainable at those temperatures. When I first proposed this, the audience was startled and started rubbishing it even without thinking. Then when we discussed it with some cool head, it turns out that everyone was convinced that it could indeed be the case. This is a classic case of prejudices blocking our vision.

In a general case, just because others covet a particular thing, it does not mean that the person having it will find it of any or much use. A typical case would be that of abundance - if someone has more money than what he/she finds sufficient, any incremental money has very little potential for making the person happy. Same could be the case with the protagonist fish in the afore mentioned song. Its our own inability to judge the drive of others that induces laughter at the situation - so in a way we are mocking ourselves.

MicroFinance - The double bottom Line

MFIs(Micro Finance Institutions) are businesses, they exist to make money; as do any other business.
One can not charity on borrowed/dreamt-up money. Or as the recent banking goof-ups(?) have told us, One cant enjoy luxury on dreamt-up money.

But for now, we are talking about MFIs, which take pride (and rightly so) in doing a social good - by lending loans to fulfill dreams, ambitions, needs.

So its only natural that they have two bottom lines, one that talks about the financial status and other, about the social.

This also in turn tells about the company's average loan balance as a % of per capital GDP of the society of operation. Essentially it talks about the the average lending as a % of average earning capacity of the locality.

A double bottom line undoubtedly helps MFIs attract soft lending and investments from socially responsible investors However,having a double bottom line also means that MFIs may also undertake less profitable activities if it fits the social good framework. After all, if it reflects positively on the bottom line, it is a good investment. These efforts can lead to a higher cost structure for the business, although in some cases, this may also be rewarded with higher yields.

PS- I was reading through the ways in which a valuation of MFI is conducted, and this seemed so different from the single minded bottom-line corporate culture that I had an insurmountable urge to write about it.

The Selfish gene - a treatise on logic building

I read this book "THE SELFISH GENE" by Richard Dawkins - first released in 1976 . An engrossing read.

In the book, The Author proposes that the fundamental level that Darwinian selection takes place is at the gene level. Then he goes on to provide examples that support his views.
Further he ventures into fields that seem anomalous as seen from the individual selection but fir perfectly into the gene selection framework.

For me the most interesting aspect of the book (I am sure the ones with better knowledge of biology can find other things more insightful, so please do keep in mind that its the opinion of an out and out mathematical bent analysis guy) was the fact that he introduced a new concept, applied it from the first principles to begin with - and then gradually built levels of abstraction - individuals and communities. This was done noting the areas the abstraction is likely to fail, and the beauty of all this is that once he has described a situation , one IMMEDIATELY knows if the abstraction level will fail or not.

If anyone ever had the (outrageous) notion that biology cant incorporate logic, I recommend this book greatly. The way the logic is developed, It could well have been a book on practical logic building. Its just that the author was interested in biology that he chose to write on this.


Warning- Chapters 8 and 9 of this book should not be read by kids. I, despite being an adult of 20 - pursuing engineering - felt uneasy while reading those chapters. In these chapters, Dawknis applies his selfish gene concept to humans. And deeply committed to our families, as we are, we find it difficult to digest all that he has to say. His analysis should hold good for uncivilized nomads - but he has not taken into account society and its effects and hence I dont think his analysis hold good in this case.

Overreliance on models

As humans, we tend to have a desire to explain everything. If something does not fit our previous model, we create a new model to fit the new data into it. We need a model to explain everything. We learn, and let our models grow- enriching our knowledge and understanding of the world.

So far, so good. but the centuries of (implicit) model fitting has demeaned our ability to account for completely unforeseen possibilities. As Nassim Taleb puts it in "The black swan", we restrict our views to our imagination. And most people cant imagine things that contrast with the existing model, yet dont have any fundamental reasons for not being true. We often overlook the limitations of the model and believe it to be an accurate representation of the world.

Like the black swan itself, until the black swan was discovered by the Europeans in Australia in 1606, it was believed that swans could only be white. It was then that people realised that there is no limitation in the model of the swans that predicts the existence of white swans only.

We do a lot of implicit model fitting - "this female is pretty"- this indication is generated after the brain takes in sensory data, and fits it to the idol, finds the matching coefficient and produces a result in the form describable to other humans. Likewise, A lion on the look for a prey would glance at the herd of deers and decide to eat one particular deer - he does this after analysing the deer's features and size, and computes the expected benefit - cost . The lion finally will pursue the deer with the largest positive gain. This is again arrived at by implicit model fitting. These models can be created by two methods - by interaction with the surroundings, and through the hard-wiring of the genes. In fact, as I look at it, genes provide only the basic framework for the decisions. All the models are designed to meet the guidelines outlined by the genes. I am not aware of any study that tested an animal's reaction when its newborn was subjected to environmental learning that contrasted with its native learning environment. Maybe any of my readers could help me in this.

But the essential part to be kept in mind while using models are, that well they are models after all. Models are meant to take into account most of the available data and predict the outcome - with a certain degree of accuracy. These CAN NOT predict the future. Once we get used to the idea that our mind uses models (most probably more sophisticated NNs(Neural Networks) than any ANN(Artificial Neural Network) in use today) to predict outcomes, and that models CAN go wrong - then we can be in better control of things.

Is the wired touch more important than the human touch?

Increasingly it is becoming more important to be "connected" than actually talking and touching people. We feel being under a compulsion to check mails, poke on Facebook, and look for any scraps left for us on Orkut. Amidst all this "being connected" mania, we tend to overlook the real connectivity - face to face.

All communication systems are designed keeping in mind the people who are expected to use the technology. The driving factor for all the social networking sites, video conferencing techniques (that reminds me of a wonderful 3D hologram projection technique) - is that people want to feel as close to the person talking/chatting with as a person sitting next door. But somehow, this net addiction has got on to us. We have more interaction with people on the net than in real life


Net is a great facilitator for contact with other humans. But, the difference between real people than their virtual persona has become so blurred that we tend to overlook the difference. It all boils down to this, do we have a virtual life because we have a real life ?or vice-versa?

Theory Vs Data - "All models are wrong, and increasingly you can succeed without them." ?

I am not claiming that I am competent enough to have a deciding say in the newest (and the HOTTEST) debate doing rounds on the web right now.But as a technology follower and leader-to-be, I feel obliged to add my own comments on this.

".......Scientists are trained to recognize that correlation is not causation, that no conclusions should be drawn simply on the basis of correlation between X and Y (it could just be a coincidence). Instead, you must understand the underlying mechanisms that connect the two. Once you have a model, you can connect the data sets with confidence. Data without a model is just noise. But faced with massive data, this approach to science — hypothesize, model, test — is becoming obsolete.........."

".......There is now a better way. Petabytes allow us to say: "Correlation is enough." We can stop looking for models. We can analyze the data without hypotheses about what it might show. We can throw the numbers into the biggest computing clusters the world has ever seen and let statistical algorithms find patterns where science cannot......"

I dont think that data can ever replace models. True, that Mr. Venter has done a lot of good for modern biology, But he is building on the knowledge of genes and replicating mechanisms discovered earlier, using the scientific methods of observation-hypothesis-validation.

Data is good only up to the limits we already have the theory ready for. It certainly is a great help in fully comprehending the implications and applications of the theoretical background we already have. But it in no means can generate new theory to do the future testing. It can only provide us with what something is but not why it is so.

PS - I love statistics , so please dont cite my short-handedness for stats as the reason why I sided with theory.