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Thursday, November 6, 2008

Market Research Vs Natural Selection

Companies, throughout the last century, placed a premium on market research. Specialized survey techniques were developed to understand the market demand for a product. Focus groups were created and millions of dollars were spent to understand the preferences of the customers.

Importance of market research for the success of a product cannot be overemphasized. However, the current market research techniques are running the risk of quickly becoming outdated with the dawn of internet and internet commerce. A much more powerful methodology is fast replacing the current market research techniques. It is what Darwin called "Natural Selection".

Let's take or for example. Anyone can post anything in this world. Millions read it. If enough people find the post worth its ink, some of them will take time to go digg it. On, the ones with the highest number of diggs rise to the top. In other words, these articles naturally selected themselves to come on top of the digg homepage. As a result, they are more likely to be viewed and therefore more likely to be digged. The really poor ones will go all the way to the bottom of the page and eventually go out of sight.

This phenomenon is not unique to articles. More and more products are being created using this natural selection process. is one such example (This reference has been directly lifted from the book CrowdSourcing by Jeff Howe... by the way I strongly recommend this book). Once people vote on the designs for t-shirts, the winning designs are produced and sold on this website. The fact that a design got the most votes from the customers of the website implicitly means that more customers like it and therefore more customers will buy it. There is no need for any other kind of market research.

Random sampling, focus groups, extensive surveys are all good and have their place but they can not compete with natural selection. I think this will be the future of market research.

Monday, September 8, 2008

Experience is the best form of Giving

For over 20 years of my life I never felt the urge to have a pizza. For the next 10, I occasionally did and I still do. Why the difference? Before I came to the U.S, I was pizza illiterate - I never saw or tasted one. Until the point of hearing about it, seeing it and then tasting it, I never knew it was good and never craved for it.

Common people crave for things whose existence they are aware of. (Otherwise they are called visionaries, not common people. Let's leave the visionaries out of this for a few minutes and talk just about common people.)

I claim a normal person has three stages of cravings. A not so deep version occurs when someone hears about something new. For example, if someone told you about an island that was almost paradise, you would think "If only I was there...". Pursuing this craving is limited to nothing more than the thought. A person will expend minimal energy pursuing this craving until multiple information sources corroborate this statement. At which point whether (and how seriously) it is pursued is determined by the motivations of the individual.

The second stage occurs when you see something but don't own it or can't afford it. A child who sees his neighbor riding a bike and wants one for himself falls in this category. Now that the child has seen it, he believes it is for real and the urge to touch it, ride it and own it grows stronger. The child will make an attempt to pursue his goal by either making his case to his parents or requesting his neighbor friend to loan it to him for a ride.

The third kind occurs when one has a firsthand experience of something and then craves for more. Say, the child did manage to ride his friend's bike and enjoyed it enough to want to own his own bike. He will be in the third category. His urge to own a bike would be a lot more now than what it was before he managed his first ride.

So, why am I talking about cravings?

There are three kinds of nations in this world, developed, developing and underdeveloped. People in some underdeveloped countries are yet to hear about the living conditions of developed countries. They certainly haven't seen it firsthand. Citizens of developing countries have seen it and some have experienced, albeit occasionally, those living conditions.

The craving of a developing country to achieve the living conditions of a developed country is far more than that of an underdeveloped country, precisely for the reasons outlined above. Consequently the effort put in by the citizens of these countries vary significantly.

Every year, developed countries send billions of financial aid to underdeveloped countries. This money is spent to "uplift" the standards of living of the poor in the underdeveloped countries. Essential things like healthcare and education are provided using this money. However, important this might be, it only promotes a culture of giving and a culture of expecting. It doesn't help underdeveloped countries to become developing countries, it just keeps them right there - waiting for that helping hand.

What can we do about it?

I propose that instead of (or in addition to) shipping billions of dollars in financial aid to the poor countries, show them the taste of living in developed countries. Bring their children to the developed nations and provide free education and firsthand experience of life in the developed world. Bring the youth over for one year of living in relative luxury. Train them and make them work for a year before sending them back Once back in their country, they will work harder to maintain the same lifestyle. They will setup industries, provide jobs and truly uplift their country. They will also talk about the good life of developed countries and through their lifestyle show the taste of development to their fellow citizens.

What is in it for the developed nations? It is in the best interests of the developed nations to do more than just provide financial aid to help the underdeveloped countries develop themselves. First, it is never a good idea to increase the wedge between the rich and the poor in a society. Second, if only it could afford them, an underdeveloped country has a huge potential to be the market for the goods produced in developed countries. That is the difference between local and global optimum for the developed nations.

After all, isn't this what happened in the case of India and U.S? Weren't Indians made to crave for a better lifestyle by letting them live and learn in the U.S? Isn't U.S reaping the benefits of the resultant market created in India for its goods?

Pictures speak a thousand words, but experience has no substitute. There is a good reason why free tasting is allowed in supermarkets. Let the underdeveloped nations hear, see and taste the pizza served in developed nations.

Sunday, August 24, 2008

Czar Putin and Dictator Bush

Russia is back!!
Czar Putin!!
Unilateral action by Russia!!
Russia attacks a democracy!!

These are some of the statements that I heard/read over the last couple of weeks. While I am not shocked, I have been provoked. Not that I am a fan of what Russia does. Nor do I have a vested interest in anything Russian.

I am still provoked...

I am provoked not because I disagree with those statements, but because I really have no way of making up my mind whether the statements are right or wrong. I am uninformed. So are the most of the people living in the United States.

So, What is the root cause of the Georgian conflict? As I understand it, a part of Georgia wants independence and Russia took sides. It just happens to be the wrong side of America. Is it that simple... probably not. But it is close.

First let me clarify my position on this issue. Though I respect human rights and understand the implications of not holding nations accountable for violating them, in the larger interest of the world, I would rather have individual nations deal with their internal conflicts. It is when an outside nation tries to meddle with someone's internal affair that greater problems arise. If every nation in this world respected Sovereignty, there would be far less war and a lot more peace.

That said, when an outside nation pokes its nose into someone's affairs, the other "responsible" nations need to exercise even more caution. They can condemn the actions, but they need to do it consistently. They should ensure the tensions don't escalate further and at the same time work with both the aggressor and the defender to achieve peace. They should not view this as an opportune moment to instill fear and misinformation amongst its citizens. This is, unfortunately, exactly what the U.S media and U.S government have used the Georgian crisis for.

I believe democracy, while not perfect, is still the best practical form of governance. That, however, doesn't, by itself, make an attack on a communist nation any less criminal. Or on a socialist nation. We, as democratic nations, can be proud of our governments, but at the same time, we need to show respect for other forms of government, especially when we see such forms of government working (like in China).

The second part of the problem is playing on the fears of the cold war era. "Czar Putin", please give me a break... Russia is a democracy and Putin is an elected official. If waging a war to protect his country's interests (whether right or wrong) makes Putin a "Czar", then innumerable Heads of the many nations around the world are no less criminal. The current President of the U.S tops that list with honors.

Russia is in its right to fear the U.S missile defense systems in East Europe. Voicing a strong opposition to what it perceives as a threat to its security (assurances of the U.S notwithstanding) doesn't make it a rogue nation. The government of U.S would probably have done the same thing (and a little more) if it were faced with the same situation. As the leader of his nation, if Putin stands up for its cause, it only makes him a strong leader, not a criminal, as being portrayed in the U.S media.

It is the responsibility of the media and the intelligentsia of a nation to inform and educate the common man. I would prefer a complete factual and neutral report of the history of the crisis and its implications to the rest of the world over the death toll in the current war. Sensationalized headlines that do little but raise the anxiety levels of the common man (who most probably knows zilch about Georgia or Russia) are a shame.

Monday, August 4, 2008

Digging Ourselves Out Of Local Optimums

Last week, I put my house up for sale. Buying your house at the peak of the housing bubble (2006) and trying to sell it at the bottom of it is not a financially wise choice. You will inevitably lose money. At first, my wife, my parents, and my in-laws were not happy about it. I guess they understood my reasons and supported my attempts to sell and move back to India to do an MBA, but they, living in their own fantasy lands, hoped to get nearly every penny that I paid for in 2006. They were hoping to find an "uneducated" buyer who has been comatose for the last couple of years and is unaware of prevailing market conditions.

I wouldn't call them greedy, they were just unrealistic. Myopic is probably more apt. I am the one who is greedy: I am willing to forego a settled lifestyle to go get an MBA in India so that I can further my long-term career. My wife is happy with what we have now (she has always preferred a simple common-man lifestyle over my preference to a famous one). I don't want to have the burden of managing this house from India and so I am willing to take a realistic financial loss in the short-term.

In optimization, an algorithm that seeks true optimality has to be aware of existing "local optima" in its path. A local optimum is a point which, when compared to all its adjacent points seems to be the best possible outcome, yet when compared to the entire feasible solution space, is not the most optimal. The global optimum (as I see it today) for my life is to move back to India, stay close to parents, do an MBA and become something big. I believe my decision to live with short-term losses is in line with this long-term approach to optimality.

World affairs are no different than affairs at my home (just the scale and therefore the complexities are different). United States, as a nation, might have been sucked into the Iraq war by a bunch of no good politicians, or, alternatively, led into a legitimate combat by a group of visionaries who saw what the rest of the world are still failing to see. The objectives then for the war may have been legit, or, may be not. That is no more relevant. What should be the focus for the people of USA is what its long term objective is now, not what it should have been then. Discussions about the war should revolve more around what is the most optimal Iraq strategy in the long-term given today's scenario, and not whether the war was justified to begin with.

But what do we get from both sides of the aisle? Between the two Presidential nominees, one argues for an immediate pullout of all troops from Iraq and the other for staying the course indefinitely. It serves both parties well, in the short term (campaign year etc.), to take those stands and in that sense they are just seeking (sub-consciously) their respective local optima. They have chosen a popular stand (to their individual constituencies) with no regard or thought for what is right for the nation as a whole. In the process, they forgot that it is the nation, and not their constituency, that they will inherit as the President.

I have issues with both these positions. An immediate pullout will cause irreparable instability in Iraq that could potentially change the social and political dynamics of the middle-east forever. An indefinite war with no visible progress and no prospects is not something U.S could afford militarily, politically and more importantly economically. Unfortunately, in this case, there is no such thing as a middle ground. What is needed here is intervention. An intervention that will create prospects - prospects for all parties involved, and a solution that will replace the mistrust and animosity with hope and peace. That is what I would like to hear from the two Presidential candidates - how they are planning to intervene and alter the course of this war and pull us all out of this quagmire.

One who takes a stand (whatever it might be) without explaining his/her position and without stating the long-term vision and without deliberation as to the consequences of executing on that vision doesn't make a leader.

In my family's case, they forced me to state clearly and then defend my position on what my long-term goal is before I could put the house on the market. In the process, my family made me a leader. If only we could do the same with the Presidential nominees... If only Presidential debates were meaningful... If only news coverage was more objective... If only editorials didn't lose their importance... If only campaigns didn't get stuck in local optima...

Like my family was hoping to find an uneducated, comatose buyer for my house (before I talked them out of it), both the candidates are wishing the "average" voter will neither question nor seek clarifications on their positions. Let's talk them out of it...

Wednesday, July 23, 2008

An Optimal World is a Myth

Well, it may be so. It is however worth dreaming about and striving for.

In this blog, I want to comment on world affairs, political developments, sports etc. and then dream about and strive for their "optimal" state.

Optimality is just a perception. One's objective function determines what is optimal and what is not and how he/she perceives how close/far the current world is to/from the optimal state. What is optimal for you might not be for me. But, if the entire world strives for (within the legal/social boundaries) what each individual believes is the optimal world, we will be living in a far better world than we are right now.

Yes, there will be argument. There will be disagreement. There will be tension. There will be drama. There will be everything else except inaction. And I think the optimal state of this world is where there is no inaction - where every individual has an opinion and every opinion is voiced, every voice is heard, every argument reasoned and every reasoning explained. Every problem in the perfect world is put through the above cycle, a solution is found, and is communicated and finally acted upon.

It is important, however, not to confuse "Optimal" with the "Perfect". A perfect world, while optimal for some, is not so for me. I don't want to venture into defining the "perfect" because I feel it is not an "optimal" use of my time. I will leave that job for others... I will just define what I believe is the optimal state of the world. I understand that not everyone agrees with my definition of the optimal. So, let the arguments start!!