We all had a role to play to get here


An interesting side effect of me working as a consulting leader in financial services domain is that a lot of interesting fundamental questions get thrown my way from friends and family on how the amazing “never ending” bull market suddenly turned into reverse gear , and if there were things we could have done earlier to ease the pain.

Let me share a few – strictly personal – thoughts.

Role of government

When crisis happens – we only get to see the Fed Reserve in action as the face of the government. Fed only can help with monetary policy and regulation . It can lower interest rates to boost the economy – but it can’t force anyone to spend it in value adding ways. That needs fiscal ( and other) policies to work side by side, which the Fed cannot influence directly . For example – if we needed to invest in infra, we could have done a lot more when money was cheap compared to now. Political division doesn’t let fiscal/education/health etc policy to evolve fast enough to make it timely and provide cushion for future shocks.

Fed itself is caught in a weird dilemma now – their charter is to ensure full employment and stable prices. But the fight for taming inflation unfortunately will need at least temporary unemployment to happen before they can ease off on interest rate hikes . And just when tightening was peaking, they now have to put more money into the banking system to ease some pressure. It’s a very hard place that they are stuck in. They have to choose the lesser evil at every turn!

Role of corporations

When money was cheap – a lot of corporations just used it to buy back shares and pay dividends and so on. Plenty of existing assets changed hands too via M&A. All of those are not bad moves in themselves – but it meant they couldn’t find a way to invest in enough new products/assets/services with a better ROI. In a capitalist economy – economic incentives will drive exactly what these companies did. Are we actually as innovative as we think we are? I hope we are – and I hope the last decade was more an exception than the rule.

Role of financial services institutions and markets

A lot of innovation does happen in FS . Just look at the kind of financial instruments that were invented and sold in the last two decades – they are incredibly complex and sophisticated . But remember – financial services are enablers of the real economy but they are NOT the real economy themselves. The health of the capital markets should be a reflection of the underlying economy – but in reality, it’s flipped the other way around. We measure the health of real economy now by watching how the capital markets function instead! It’s set up backwards !

Cheap money for a decade or more has made risk taking look easy . Remember the “taper tantrums” that the markets threw when Fed tried to say that they want to rein in interest rates just a little over a period of time? Fed had to back off quickly when market got annoyed .

Markets and corporations both have to gain some balance about the fundamentals of real business and stop using stock price as the primary measure of success. Otherwise we will never get out of the high highs and low lows .

Our role as consumers

Our own pension and 401K are all connected to how well the markets perform. We collectively carry a lot of credit card debt, and net worth is largely our primary home for many of us . So we are all vested in having a perpetual bull market and low interest rates, irrespective of the side effects.

We are not all equally well educated on the financial system though – including basic skills in personal budgeting. While we are a sharply divided country ideologically on political lines – we don’t largely involve ourselves in actual politics like standing for elections ourselves or serving in civic bodies etc. If we don’t plan to actively involve ourselves in politics – the next best thing to do is to learn enough to elect the best possible representatives to watch out for us. The best advice I got as a young man was from Dr Kevin who taught me financial management in business school . He told me “All you need to do is to try and live under your means and invest for the long term”. A quarter century later – I can’t think of better advice to give my daughter .

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The role of great technology in the run on Silicon Valley Bank


I am glad the Silicon Valley Bank depositors will get their money back . Now the world can take the time to debate and fix the underlying problems .

As always, this is strictly my personal opinion and nothing more

This was not really a Lehman kind of scenario like a lot of social media posts seem to imply. It’s more of the classic “run” scenario . When there is mass panic and every deposit needs to be yanked out quickly – I doubt any bank can survive that , including the very big ones. That said – there is no excuse at all for SVB not managing their risk competently .

Banking business model – and the regulatory frameworks that need Banks to hold certain amount of highly liquid assets – generally assume a scenario less catastrophic than a full on run .

The primary question now in my mind is on what will change about risk management at banks – and potentially the regulations around it .

The last round of big changes were made because of the 2008 crisis . Those regulations were made when technology was not as advanced as it is today. The kind of run we saw in old movies and read about in college – they had long lines of people waiting at branches to take money out via tellers . Sure in 2008 there were smartphone apps – but not everyone had them . High speed internet was not as widely available . And social media was not yet the thing it is today .

It meant that people needed a bit of time to act because of the inherent inefficiency of banking processes .Now there is very limited friction . If a founder panicked seeing the VC’s email to pull money out of SVB – the instinctive response probably was not to go find the 8-K filing of SVB . The more likely scenario is a quick look at social media groups , Twitter etc and then do a wire transfer on the phone . The run in this case is a lot faster than any time before in history . Maybe we should find another word instead of “run” to refer to this in future !

I know that Banks do evaluate technology risk carefully – and so do regulators . But that’s about systems not crashing , being auditable and not causing trouble to customers and so on . Frictionless transactions have always been a good thing . Managing the risk of advanced tech and social media (which is also about great technology that advanced fast) fuelling a Bank run will be a new risk management muscle to exercise for all parties – but one I am sure they will start thinking about seriously and real quick !

How do you become a great hostage negotiator in FBI ?


Train to become a project manager and if you don’t get to the top of the class , apply for the hostage negotiator role at FBI 🙂

I am joking of course – but when I look back at my own career where I have managed projects, the skill that made me successful was my ability to negotiate . Since then I have moved on to other things, but the people who have my respect the most are the folks who lead successful delivery of projects . Time and again , I have seen that people who have PM roles succeed or fail depending on their negotiation skills

If there is one role that I think is even harder than that of a project manager – it’s that of a product manager . These poor souls usually have zero authority and all the responsibility to get things done . But I digress … let’s get back to project managers

The negotiation experience starts before you even win the work . There are some great PMs who are always in demand . Everyone wants them . These PMs know what is in store once they say yes to a project – and start negotiating with the sales team , top management etc to make sure they are front and center from the beginning of the sales process so that undeliverable stuff doesn’t get promised ( or god forbid get written into actual contracts ) . Not all PMs are that lucky

What is the first law of projects ?

It’s like laws of physics – you have to take it as a given. Entire discipline of project management is based on the fact that you can’t outrun Murphy’s law . Agile vs Waterfall doesn’t matter – Mr.Murphy is an equal opportunity flame thrower . You will rarely have easy decisions . You need to be ready to make “lesser evil” decisions all the time . It’s a “character building ” exercise 🙂

What is the second law of projects ?

I am just going to call it Vijay’s law till someone else lays claim to it – it states “all problems are caused by people and hence all solutions also are about people” . Stack the deck in your favor with the best people for each role whenever you can . Technology , budget etc are all people problems ultimately !

What is the third law of projects ?

Bad news doesn’t get better with time . Communicate bad news earlier than later . What makes stakeholders cranky is not usually failure – it’s the thought that they could have done something to stop the problem if only they knew sooner . Try hard to not surprise people to the extent the first law of projects let you . That’s half the battle .

What is the fourth law of projects ?

Take all the help that is available when offered , and keep asking for more when you need it . Heroics are unavoidable in many projects – but do t let that be the first solution option .

What is the fifth law of projects ?

Know the contract , but don’t use it as a daily weapon in the project . Your job is to make sure everyone involved understand what is the problem to be solved and why it is a problem that needs to be solved . PMs who don’t understand the WHY usually fail . Knowing the WHY also helps frame the deviation from scope , funding and timeline in the proper context 

What is the sixth law of projects ?

The current project is always the worst project ever ! It will look ok after you have moved on to the next project . In other words , remember that projects have end dates and hence don’t panic on every small thing that happens in day to day execution . I have had absolute nightmare projects – and now I can joke about it .

That’s all there is to it … don’t sweat it 🙂

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