Friday, June 27, 2008

What is the easiest way to make money?

I have been in business for only 2 years now but I have learned a very important lesson during the course of these two years. As a matter of fact, I have learned quite a few :-), but this is something that I felt was worth sharing. Well, I have learned the easiest way to make money in business. Interested to know that, dont you?

It is not a big secret and probably you know this already. Additionally if you have read a few books in economics you must definitely have come across this before. Well, the easiest way to make money in business is by saving money. A rupee saved is a rupee earned (or in other words - A dollar saved is a dollar earned). Adam Smith was so fond of this principle - parsimony, he called it fondly - that he must have mentioned it where ever he had talked about profits in his book.

An employed person always earns regular fixed income (unless he gets a hike/promotion/bonus/dividend) and he does not have to deal with the concept of profits. He can go ahead and spend whatever he want whenever he want as long as he can survive for a month with the money he gets.

As opposed to the above concept in the case of an employed person, a company earns a variable profit which is equal to the total income for the month minus the total expenses for the month. Unlike in an employees case where the salary is fixed, a company can increase its profits by increasing its income or reducing its expenses. Simple math isn't it.

Now increasing income depends on two factors - company's internal efforts and the result of this effort on external factors like public, media etc. On the other hand, reducing expenses is a totally internal effort. Of all factors related to a company, the company would have more control over something that is totally internal than on something that is partly internal and partly external. So reducing internal expenses has to be more easier than increasing income.

Now reducing expenses is not about reducing operations or scaling down operations. It is all about increasing efficiency and reducing wastage. This could be as simple as reusing and refilling pens or as complicated as optimizing delivery trips or purchase trips. It could be as simple as keeping things ordered in your drawer or as complex as indexing and ordering your registers. It could be as simple as reusing a pin/clip or as complicated as rewinding a burnt fan.

Even though an employed person does not have to worry 'per se' about his profits, he can always cut down on his expenses and increase his efficiency to be able to utilize his saved time and money on other worthwhile activities/products/services.

For a company, in addition to reducing expenses, an overall increase in increase efficiency will also indirectly increase the overall income of the company. So now you know how to make easy money. Go ahead and try it out in your company i.e. if you are lucky (or is it bold) enough to own your company.

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Sunday, June 1, 2008

Why should you control your desires and emotions

When I think about human mind there are two separate sets of aspects that I am interested in. One set concerns thoughts and related process that are within your conscious control and the other is the set of emotions and desires that are not normally within your conscious control. My hypothesis is that a person will be able to lead a happier and more successful life if the conscious/thinking part of his mind is in control over all his thoughts, emotions and desires. Let us see.

There is a small ambiguity here in that I am taking about a "you" and a "your mind" here. The "you" I am going to talk about will represent the part of your mind that is concerned with the first set mentioned above. It might look funny because under this notation "you" is a subset of "your mind". Leaving aside the play of words let us take a look at the issue I would like to discuss.

Any discussion on mind and its processes would inevitably touch a lot of different areas that I am not very clear about and these are discussions primarily to get my ideas clear on the subject. There are several interesting related questions like What is mind? What is matter? How is mind related to brain? What defines "I"? Is "I" different from "my mind"? How do you define consciousness? What is ultimate happiness? What is the objective of life? - that are still not very clear to me. However I think the topic under discussion is more related to practical aspects of getting in control over your emotions and desires than the epistemological aspects of these questions.

Every person has both sets of processes within his mind. Processes that are within his conscious control and processes that are not. Any thought or action resulting from a thought where the thinking part of his mind dictates the thought or action and where the person is fully conscious of the thought or action constitutes the first set of process.

Let us look at a simple example for a process that is within a persons control. Consider myself typing this article. My mind is framing the sentences that I am going to write and then this thought invokes the necessary mechanical processes in my hand to get it into typing. This is a process that is within my control. I have to decide to think about the next sentence and then I have to think about the ways of phrasing the idea into a good sentence. Once the sentence is formed I will to have my fingers type them in. These are processes controlled consciously by the thinking organ that my mind is.

There is now a second set of processes in human mind that are not quite within the conscious control of the thinking organ. Simple examples would be emotions like sadness, anger, happiness. Desires form another class of processes in human mind that act as root causes for further thoughts, emotions and actions. Habits, memories, recollections etc are another classes where the conscious being does not really play a role.

Why did we try to classify these processes as those that are within the control of your conscious being and those that are not? The objective is to find a way for a person to be more in conscious control over his life, his actions, his thoughts, his emotions and his desires. Why does he have to be more in control? Again, to be more in control over one's life will give the person an ability to chart out a fairly predictable life and allows him to increase the probability of him achieving his goals in life.

So the premise on which we are going to build the discussion is that people would be able to increase the probability of achieving their goals in life (and that they would have goals in life) if they are able to control their actions. Yet another assumption is that achieving happiness in life is a common goal for every man and the goals in life mentioned above includes this common goal also.

All of our physical actions are dictated by our mind - either consciously or not consciously. I type - because I want to. I sit late - because I want to. I quit my job - because I wanted to. I sneeze automatically - because of an itch. My eyes well up automatically - when I become sad. I smile automatically - when I become happy. These are small examples of how our consciousness dictates our conscious actions while the rest of the mind outside of our consciousness dictates the remaining actions.

Whenever a person comes upon a situation where he has to take some action there would be two different forces working in his mind. One would be the thinking conscious part of his mind and the other would be the part constituted by his emotions, desires and memories. The stronger of these two parts would take control over the situation and biases the decision making. A person who has more control for his conscious mind would take conscious decisions whereas the opposite kind would take more impulsive/habit oriented decisions.

If our actions are controlled by our consciousness then we can base these actions on a logical framework where we can weigh the causes and effects and decide for or against taking the action. If instead our actions are not controlled by our consciousness then they will not be based on a logical framework, rather they would be based on habits and impulses and their root causes would be emotions, desires and memories and they may or may not align with the rational choice under the given circumstances.

A rational action is the optimal action taken after analyzing the pros and cons of the possible alternatives. If we were to assume a generally applicable rational framework then all rational actions should lead to optimal solutions given the situations, issues and criteria. This would mean that such an action would be superior or at least of equal quality to an action based out on habits or impulses. This should mean that rational actions should be better than the latter set based on emotions, desires and memories.

A person who is more in control over his desires and emotions would be able to rein in these aspects of his mind and allow his reasoning to take charge and make decisions for or against possible actions. This would make sure that the percentage of impulsive actions would be fewer and the person would behave according to the rational framework mentioned above.

I don't think it will be possible for a person to bring the whole domain of his mind into his complete consciousness, but as the percentage of actions under his conscious control increases the person would start to act more rationally than otherwise. If people were to start taking actions rationally as discussed above and if we are to assume a generally applicable rational framework, then, a lot of problems faced by the human race like communal tensions, religious conflicts, international conflicts and most importantly general crime would start to diminish.

When we look at a more personal level, rational actions should allow the person to be more efficient in whatever he is doing. As was mentioned above it would also increase the probability of success in the endeavors since the actions are more tuned towards the outcome than otherwise.

We have looked at a cause perspective to see why controlling desires and emotions are beneficial. It can be shown that this control would be good from a result perspective also.

Irrespective of how much you control your own actions there would still be too many un-controllable external factors that will decide the final outcome of your individual action or the outcome of a circumstance. Now if you do not have control over your emotions then you will end up being depressed when circumstances turn bad or when actions don't lead to successes. There is also a corollary i.e. you will not be ecstatic when circumstances turn good or when actions lead to successes. Now by the elimination of ups and downs you will effectively increase your average productivity by increasing predictability.

I should however warn that a total control over emotions are desires would lead to a mechanistic world. Now emotions and desires are what makes humans humans. Without them we would just be machines. Emotions and desires give the flavor to life that has made the world what it is now. Since a total elimination of desires and emotions is practically outside of the reach of humanity we really don't have to worry about such a scenario

Rather, given the advantage of being able to solve some of the most acrid problems faced by humanity this is something that most people should strive to achieve. Moreover, being in control over your emotions and desires would also mean that you can decide whether to yield to an emotion or desire according to your need. So you could decide to be happy (or for that matter be in any positive emotional state like passion, affection) whenever you want and wherever you want.

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