JUNE 23, 2002
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Watching I-flex IPO
A host of IPO-wannabes-including Tata Consultancy Services, Maruti Udyog, and Hyundai Motor India-is going to be watching the I-flex public offering closely. The issue, due in June first week, will indicate the moribund primary market's appetite for new stocks, and the small investor's willingness to return to IPOs.


Saving UTI
It's bail out time again at UTI. With two of its monthly income plans maturing in July, it needs find Rs 2,400 crore-and fast.

More Net Specials
Business Today, June 9, 2002
 
 
Sports, Organisations, And Free Markets
It's the season for sporting perspectives of business. We'll attempt a flip.
Indian football has suffered because it couldn't make the transformation to a free-market regime, a change required
to go from being good at the local level to great at the global one

The British took football to other parts of the world. The first football club in Argentina-one of the favourites to win the ongoing World Cup-was the Buenos Aires Football Club, an offshoot of the local cricket team. And the first Italian football club was the Genoa Football and Cricket Club, founded by some expat Brits. So, how come India, ruled by the British for 190 years, has a middling cricket team and no football team at all? We have one on paper and it does play some tournaments but that's like equating a performance of Joseph and the Amazing Technicolour Dreamcoat in Chennai-I saw one, many years ago and it wasn't bad; actually, compared to Indian football team's showing, it was world class-with the real (West End) thing.

  Going By The Book
 
  The World Is Ours To Lose  
  Don't Be A Control Freak  
  Rough It Our  

There's one more curious fact about football in India: how come the only two states to boast football clubs of some stature are West Bengal and Kerala? It can't be the fish, for the state that consumes the maximum per capita, Tamil Nadu, is a minnow in the football domain.

This essay won't attempt to answer the first question; that's best left to historians. As for the second, West Bengal and Kerala's prowess in football may have something to do with their long history of Communism.

The only evidence I can offer towards this is empirical. Consider the erstwhile USSR's dominance in the Olympics; China's performance at the games; and tot up all the medals won by each of the constituents of the erstwhile USSR since the demise of the communist regime. Not convinced? Ever wonder why the resurgence in English football-the country is my personal favourite to win this World Cup-has paralleled the revival of the Labour Party? The last may be nothing more than a coincidence; still, it's an intriguing one.

Management guru Peter Drucker once described an organisation as something that allows ordinary people do extraordinary things. Maybe the Communist obsession with rule-based-engines helped. If it did, it must have been in the initial stages. For eventually, the same free-market principles that apply to business hold true for sport. Look at Europe's best football clubs: talent migrates to the highest bidder; yet, each club needs to make economic, not just football, sense. The minute player salaries-these constitute the bulk of a club's expenses-exceed revenues (this is happening to several clubs in Italy), the clubs will go under. Their best players will defect and their performance will suffer.

That isn't very different from what happens in business: a company marshals its resources to create products or services that it can sell for profit. If the quality of the football, sorry, products and services is bad, it will find few takers. And if it spends more on its resources than it can recoup from its sales, it will make losses. Neither is a sustainable proposition.

Indian football (or football in Kerala and West Bengal, to be exact) has suffered because despite benefiting from the advantages of organisation in the early years, it couldn't make the transformation to a free-market regime, a change required to go from being good at the local level to great at the global one. Maybe Communism was to blame: Kerala and West Bengal have a poor track record in business. As for Indian cricket, the British created the skeleton of an administrative structure and Free India built on it. Only today, the organisation could-to use the lingo of consultants-do with some re-engineering. Just like the Indian cricket team could do with a pay-for-performance compensation strategy. Or wouldn't that be cricket?

 

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