Book Reviews
Easy-to-read History of Indian Railways
There are several books on the history of Indian Railways, and they are of two kinds—either academic, heavy-reads, or coffee table books with glossy pictures, peppered with some text. The book is easy to read, quick to finish and to the point, as the present generation wants; yet, it sums up the entire history of the Railways up to independence. But, let me point out, compiling an easy-to-read book is one of the most difficult tasks which has been well accomplished.
 
A Niti Aayog member, Dr Debroy has been the chairman of the high-powered committee to restructure Indian Railways. (Many of the committee’s recommendations are being implemented, the main one being the discontinuation of a separate Budget.) As the committee’s work progressed, the members were curious about Indian Railways’ evolution and accumulated an inventory of facts and trivia about it. The book is probably an outcome of this knowledge.
 
Indian Railways: The Weaving of a National Tapestry starts with an introduction by business writer Gurcharan Das, who mentions that the East India Railway Company was one of the first to get going and that the Great Indian Peninsula Railway “constructed a second line” for 35 miles from Bombay to Kalyan. The fact is that though the East India Railway Company was the first one to be formed, the Bombay line was the first official line to open, as the inauguration of the East India Railway got delayed because the ship carrying its locomotives and wagons sank. The main book, however, has no such errors.
 
This book is divided into five chapters, from 1830s to the 20th century, and rightly mentions that the first railway in India started in the 1830s at a small place near Madras. The flow of the book is chronological, beginning with the inception of the first lines in the country and the stray ideas before that period, supported with old maps, photographs and archival news reports, though there is a small mix-up between 1853 and 1953 on pages 4 and 5.
 
While the book has liberally used information from the Indian Railway Fans Club Association’s webpages and several reference books, it also presents a good amount of original data and research from the railway archives and unseen documents. The outstanding part of the research material is the discovery of correspondence between ‘P’ and ‘C’, sometime in 1857, from the railway archives, on the issue of railways versus irrigation. Neither ‘P’ nor ‘C’ revealed who they were; all that we know is that ‘P’ was in favour of the railways and ‘C’ argued against them. An interesting quote from ‘C’s letter, pronouncing railways a failure reads: “The Railway cannot supersede the road in everything; not only so but if it cannot convey everything much cheaper than could be done by the road it must be pronounced a failure.”
 
Interestingly, the book does not just talk about history and statistics, but gives an interesting account and stories from the past, including the entire gripping case history of the 1921 GIP Railway Murder Case and about crime on trains, with a historical perspective, presenting a table of secret lingo of the professional thief. It also goes on to tell you the story of the railway police and the police commission.
 
Another asset of the book is that it has a comprehensive list of the narrow and metre-gauge rail lines, with photographs. The book details the history and perspective of how the railways’ finances were separated, leading to an independent Railway Budget in the 1920s, until it ended this year. Dr Debroy corrects the media’s conclusion that there will be no Railway Budget. “Every organisation has a budget and so will the Indian Railways. What will be different is that a railway minister will no longer present this Budget in Parliament through a speech. The separate presentation will not be required legally and constitutionally,” he explains. 
 
Further, a comprehensive table of evolution of policies and committees on the Railways between 1850s and 1947 shows how railway tracks have changed since inception and how they were when India became independent. The book ends at 15 August 1947. 
 
This book is not a feast but a brunch and will be liked by everyone. 
 
(The author is a journalist, author and railway historian with a passion for the history of Indian Railways)

User

Building Great Products Is Not Enough
All companies struggle with the simple question: How do you get noticed in a world of increasing clutter, make a sale and, finally, retain customers? Additionally, today, many businesses—from media to retailing — find themselves threatened by the digital storm. How do you fight cheaper, or free, options from ruining your business model? The commonsense response is: Keep improving the product quality and spend more to market your product. 
 
Bharat Anand, a Harvard Business School professor of Strategy, in a new book, The Content Trap, argues that this approach is wrong. The solution to the problem of a slowdown, or becoming extinct, lies in recognising, exploiting and creating three kinds of connections: user connections, product connections and functional connections. Perhaps, nothing explains this better than the history of Apple.
 
In one of the most stunning turnarounds in corporate history, Apple came back from being a struggling computer-maker with a 3% share in the personal computer (PC) business and a $1 stock to become the most valuable company in 2011. Everyone knows that this is attributable to its three ‘insanely great’ products, as Steve Jobs, the founder of Apple, liked to say. These were: iPod, iPhone and iPad reflecting world-class innovation, ease of use and gorgeous design. These features were backed up by brilliant marketing. 
 
According to Anand, these are appealing explanations, seemingly self-evident. But they are not sufficient, owing to an inconvenient truth, exemplified by Apple’s market success across three product generations. In Mac computers it has less than 10% market share but more than 30% in phones and tablets. iPod had market share of 70%.
 
Insanely great products have been a feature of Apple’s corporate history, ever since it was founded, in 1976. So, why did it struggle for 25 years, between 1976 and 2001? Insanely great products are no guarantee of corporate success, writes Anand. Thinking that they would be is a mistake Apple made during its early history, by focusing on that aspect at the expense of all else. Many media companies too have made the mistake, convinced that if they produced great content, everything else would take care of itself. This mistake is the ‘Content Trap’.
 
Starting with the 1984 launch of the Mac (Macintosh), Apple went head-to-head against PCs which ran Microsoft’s operating system. Macs were easier to use, more stable and cooler. Apple introduced its famed graphical user interface (imitated from Xerox) several years before Microsoft’s version. And its advertising was memorable: its 1984 “Big Brother” Super Bowl commercial aired only once during the game, and never since, remains one of the most-watched television ads in history. Yet, for two decades after the introduction of the Mac, Apple’s world market share in PCs declined steadily, touching just 1.9% in 2004. Its highest market share was 15%. Everyone else used PCs embedded with Microsoft’s bloated clunky software. Why? User connections and product connections.
 
“A user’s willingness to buy a personal computer depends primarily on two things: How easy is it to communicate and share information with others—friends, family, co-workers? And what is the range and quality of compatible software applications? Without those connections, a computer is virtually useless. Other features surely mattered—price, design, color, and marketing—but none so much as how many other people use that type of computer.” Apple overcame this with iPhone and iPad, where user connections did not come in the way of its insanely great products.
 
The second reason was product connection, more precisely ‘product complements’. To understand complements, go back to the case of Mac. In the words of Anand: “Hardware without software is useless. Treat the two as separate profit centers and neither has an incentive to price low enough to stimulate the complement’s sales. Keep third-party software developers from creating applications to accompany your product, as Apple did, and you're unlikely to succeed. In 1985, the Mac commanded only a small fraction of the applications available on the PC, and this dynamic only worsened over time.”
 
But iPod grew to command more than 85% share in MP3 players, thanks to Apple’s innovation and vision in introducing an MP3 player into the market, engineered to take advantage of increasing interest in digital listening. “Except, the iPod wasn’t the first such device on the market: RCA’s Lyra, Creative Labs’ Nomad, and Diamond Multimedia’s Rio X, among others, preceded it, and in some cases were more technologically sophisticated than the iPod,” reminds Anand. So, how did iPod, coming late to a market, where a six-month head-start can be crucial, beat its rivals? 
 
“The reason for the iPod’s early success came in large part from the availability of its software complement, iTunes. Buy another MP3 player and you’d have had to go to a separate (and often obscure) site to download music. Buy an iPod and the process was simple: Go to the iTunes store, peruse more than 200,000 songs. One click and a song was transferred to your device. Steve Jobs had spent months negotiating with the major recording studios to ensure that on the day the iPod was launched, it had a song library to ensure its value. And the system was open: iTunes software could be installed on a PC, making the iPod compatible with the largest computer platform. Apple’s ability to produce a great product was not the only game changer during the last decade. Its ability to manage complements was.”
 
This book is brimming with such examples—from talent management agency IMG to the completely contrasting digital strategies of The Economist and Shibsted of Norway, New York Times, Star TV’s Hotstar, Tencent which is the Facebook + Whasapp of China, and so on. 
 
User connections: This explains why the New York Times paywall was effective in 2011, although earlier paywall efforts by the paper had failed. User connections also clarify why digital may not be the real threat for book publishers and cable operators. And they point to why fledgling start-ups, such as Tencent, have grown in a decade to become among the most valuable firms on the planet. Why is it that Airbnb, Facebook, Google and others have created billions of dollars of value without creating content? They have leveraged connections. 
 
Unfortunately, managing user connections doesn’t come naturally to companies. Companies may spout jargon such as user-centricity, but “the center of gravity in organisations tends to be products, not users.” If you are product-centric you will miss the wood for the trees. The value of newspapers is not in news; it is in classifieds. The real value of cable operators was seen to be in channels, but their real value turned out to be pipes, delivering broadband connection. The value of PC manufacturers can be ease-of-use, but the real value is in their inter-operability—being able to connect to other PC users. “Success comes not just from creating content; it comes from Creating to Connect,” writes Anand.
 
Product Connections: The author gives numerous examples of creating value from product connections. The music industry experienced a revival not by propping up prices, fighting pirates, or making better music, but because live performance took off. Mark McCormack enjoyed great success in the “fragile arena of talent management” not by figuring out how to identify great talent, but by creating new businesses and markets that were connected to its core product. “Once you embrace the idea of product connections, the expansion of tire companies into restaurant guides or of theaters into childcare seems not only logical but necessary.” His prescription, expand businesses to see connections, not stay narrowly focused.
 
Functional Connections: Functional connections are connections between choices themselves, which allow firms to differentiate themselves. Wal-Mart has had a well-known strategy of starting new stores in rural areas, doing away with regional offices (saves 2% of overheads), setting up a cluster of stores (no, they did not cannibalise on each other) and not spending money on improving the ambience of its stores. Functional connections are so strong in Wal-Mart that its model, though well-known, has been hard to replicate. The fastest-growing brokerage in America is Edward Jones. Its strategy is a series of things it will not do: no trading in own account, no selling complex products and no large hordes of advisors who remain largely anonymous. It gets away by charging $100 per trade.
 
This is a great book, a must-read for all business people and strategists in any organisation. The most important takeaways are: one, strategies must be rooted to your specific context; two, saying no to things that are not relevant to you; and, above all, knowing your customers, what they want and aligning your organisation to deliver it in a unique way.

User

Venture Capitalists of a Different Era
In India of the late-1800s, there was backbreaking poverty, occasional famines, and age-old cultural practices. But, by the early-1900s, major railway lines linked the ports to the interior as well as to the main cities and towns; steamship moved cargo and people along the coasts; and three Presidency Banks offered business loans. There were two stock exchanges—the Bombay Stock Exchange established in 1875, the second in Asia after Tokyo, and the Ahmedabad bourse that came up in 1894. The Calcutta Stock Exchange came up in 1908. 
 
The US Civil War had turned India into a major source of cotton for the mills in Lancashire which created a small group of extremely wealthy Parsi and Gujarati merchants in Bombay. They had ambitions to set up spinning mills and composite textile mills in Bombay and Ahmedabad. The Crimean War (1853-56) forced the flax mills in Dundee to switch to jute grown in east Bengal and the Scottish businessmen soon realised that gunny bag and cloth could be more profitably manufactured along the banks of the Hooghly around Calcutta. This is how India’s textiles industry took birth in the west and jute industry in the east. There were many other business opportunities. In the words of Omkar Goswami’s Goras and Desis: “Railway lines had to be built and operated across the country; sugar to be manufactured from cane that was being grown in the Punjab, the United Provinces and the Bombay Presidency; and tea to be cultivated, processed and exported from plantations in Assam, Darjeeling and the Dooars. None of these activities required great manufacturing skills and technology. There were steady profits to be made.”
 
By this time, Calcutta, Bombay and Ahmedabad had enough wealthy urban Indians who were willing to risk a part of their wealth to a welter of new businesses that were sprouting, given the then rapid technological change. India also had a contractual and legal system and courts for adjudicating on commercial matters. Time was ripe for entrepreneurs to dream big. But they still needed something more: an organisation that could “attract risk capital and arrange the manufacturing resources.” The managing agency came into being. 
 
A typical managing agency was a “partnership or a closely held private limited company that leveraged its connections and entrepreneurial reputation to float different businesses across India.” Managing agents controlled the businesses in textiles, sugar, transportation, jute and so on. Gillanders, Arbuthnot & Company, which started as a partnership of FM Gillanders and GC Arbuthnot, was in construction. Mackinnon & Company, Mackenzie was in inland and coastal shipping; Bird & Company was in coal and labour contracting for railway lines; and Andrew Yule & Company controlled six jute mills, 11 collieries, 10 tea plantations, a steamship company and several smaller firms. 
 
The managing agencies spotted new opportunities and raised the initial capital. Then, they floated a public issue. Their reputation attracted public money. Riding on growth opportunities and light regulation, over the next few decades, managing agencies came to control vast sections of Indian businesses and continued well into independent India until Indira Gandhi decided to axe them in 1970. The raison d’être of managing agencies was obvious. More than 100 years ago, when there were no developed markets for accessing finance and spreading the risk, what could have connected risk-takers or financiers to business opportunities? It had to be a form of organisation that could take the risk of assessing new business opportunities, fund business enterprises and maintain control by holding legal and financial strings. In some form or the other they have existed “in the US up to the Great Depression; in the UK till the end of World War II; in France, Italy and Spain till much later; in Japan and South Korea till the 1980s; and in much of emerging Asia right up to recent times.”
 
Omkar Goswami, an economist and raconteur par excellence, brings the story of managing agencies alive by narrating their rise through a cast of highly colourful characters. He starts with prince Dwarakanath Tagore, the creator of the managing agency idea, grandfather of Rabindranath Tagore, a risk-taker, a fabulously wealthy man who went bankrupt and died in London in 1846. And ends with the scamsters Haridas Mundhra and Ramkrishna Dalmia; Tata, Birla, Wadia, Sarabhai, Lalbhai, Walchand Hirachand and others appear in between. It’s a fascinating slice of India’s business history.

User

COMMENTS

Rushikesh dhebar

9 months ago

Nice information shared of GREAT INDIA

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)