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On December 1, 2017, Pranay commented on The MBTA’s climate challenge :

Thanks for the thoughtful article. As has been mentioned in the article as well as the comments, the key problem here seems to be the funding of the investments required to make the MBTA network more resistant to natural calamities. It might be unrealistic to expect the administration to allocate incremental budget for this purpose without additional sources of revenue. In my opinion, the incremental revenue has to come from the MBTA network itself for the funds to get allocated to foresighted investments into safety. The incremental revenue can be driven by the two fundamental parameters of volume and price.

1. Volume:
The administration needs to take steps to increase the usage of public transportation. They can do so by potentially making personal car travel relatively more expensive through taxes or increased tolls. Also, measures to increase stickiness to public transport, such as, monthly and annual membership cards which offer more economic transportation, can be helpful. In any case, the traffic congestion in Boston is a major deterrent to driving in the city. Increased usage of public transportation will (i) Help drive more revenue to the MBTA, (ii) Potentially increase profitability of the MBTA operations if they are able to maintain efficiency and leverage the fixed cost base, and (iii) reduce congestion on the roads!

2. Price:
Increasing the price of public transportation is obviously a tougher strategy to implement. However, if the rationale and long-term benefits are communicated transparently to the commuters, it might gain acceptance. Also, MBTA could try to better advertise the benefits (in terms of time, economic benefit and environmental sustainability) of using public transportation.

The isolationist behavior of some countries is a real problem to business models similar to Monsanto’s. My concern is that they may not be able to solve it by either developing more IP in-house versus buying other companies. Even the acquired IP may face similar issues in foreign geographies. One potential solution could be structuring the IP licensing contracts differently with more legal protections against such force majeure incidents. For instance, Monsanto could split the licensing contracts into a combination of a larger upfront payment and a smaller royalty. The upfront payment can be used as an escrow amount / insurance against any such problems arising in the future. This obviously creates more barriers for Monsanto to sign up new licensing customers and puts the company at a competitive disadvantage. However, if the technology is differentiated and adds enough value to the end consumer, Monsanto might be able to implement it.

On December 1, 2017, Pranay commented on For AT&T, It’s (DirecTV) Now Or Never :

This is indeed a very interesting situation in corporate mergers. My opinion is that this acquisition is actually critical for AT&T’s entertainment business and they should continue to march ahead with it.

Given the intense competitive pressure in this industry, AT&T needs a differentiating edge. The acquisition of Time Warner could very well provide them this edge. Time Warner has valuable long-term sports contracts with the NBA, MLB and NCAA and also a diverse library of content with TNT, TBS and CNN. Adding to that, HBO offers a good growth opportunity with HBO Now [1].

Further, the AT&T management seems confident of winning the DOJ lawsuit. As you mentioned in the article, Randall Stephenson, the AT&T CEO, has clearly expressed that the company would not be willing to sell any strategic assets to complete the merger [2]. The market also believes that the DOJ lawsuit may not have strong argument against the merger [3]. Moreover, AT&T and Time Warner have extended the deadline for their merger agreement, which implies their confidence of winning this battle.


On December 1, 2017, Pranay commented on Unilever: The Problem of Water :

It’s interesting to learn about Unilever’s efforts in this area of adapting ecologically sustainable practices. As your article and the comments point out, the target Unilever is striving for might be unrealistically aspirational given where they are seven years into the decade. However, their progress so far is indeed praise-worthy.
I would like to highlight two aspects on this issue with respect to the two sides of the value chain:

1. Customers:
The most tangible way for CPG companies is probably through their advertising. I wonder if Unilever will start emphasizing the environment-friendliness of its products in their promotions on print and digital media. This presents a critical trade-off that a company needs to decide on – whether to focus on the real value-add the product offers the consumer versus the social benefit of being an environmentally savvy global citizen. Every second of the consumer’s time-share and mind-share that Unilever spends spreading the awareness around water-conservation is a second less in highlighting why the product is great.

2. Suppliers:
Unilever’s sustainability efforts on the supplier side have been limited only to the agricultural raw materials and the company has conveniently ignored talking about industrial raw materials altogether. This concerns me about whether this entire initiative is actually genuine.
The industrial raw materials that Unilever uses in its products, such as soda ash for laundry detergents, chemicals used in soaps, crude oil derivatives used as material bases in several of their products, etc., use enormous amounts of water in their production / refining processes. Given the commoditized nature of some of these raw materials, it is easy for the suppliers to focus solely on cost reduction rather than using environmentally sustainable processes. It will be interesting to see if Unilever takes some measures to enforce water-conservatism in this part of the supply chain as well.

On December 1, 2017, Pranay commented on Admitting cybercriminals to hospital through the front door :

This is an extremely thought-provoking topic, particularly as we prepare for leadership roles in the near future. In the corporate world, there has been an increasing pressure on the companies and their boards to understand cybersecurity better. The advent of quantum computing definitely adds to the risk element here. However, I would like to point out a couple of potential mitigants:

1. Post-quantum cryptography

You are absolutely right that a quantum computer will render the currently used public-key cryptosystems such as the RSA, DSA, elliptic curves etc., obsolete. The cryptography academia is approaching this problem with the new research area of Post-Quantum Cryptography (“PQC”) [1][2][3]. Although, it’s important to realize that research in PQC is years behind the quantum computing research. For instance, IBM asserts that its functional quantum computers are only years away [3]. This brings me to the second point of the accessibility to quantum computing.

2. Who can really use quantum computing?

In the current state of affairs, quantum computing is obscenely expensive and operationally challenging due to the requirement of near zero temperatures. This gives some comfort that criminals will not be able to get access to quantum computational power in the near-term. However, if we consider geopolitical tension between countries, it is a completely different situation. Both Russia and China are often perceived to be ahead in quantum computing research as compared to the United States. It is frankly scary to imagine what that could potentially mean!


On December 1, 2017, Pranay commented on Closing Borders May Create a Wall That Boeing Can’t Fly Over :

Thanks for the really intriguing article.
The thing that surprised me the most about Boeing’s decision to increase outsourcing was the question we often talk about – “What business is the company in?”. As I understand, Boeing’s business model historically thrived on their engineering and manufacturing competencies. If 70% of the manufacturing is outsourced along with engineering IP, Boeing seems to be moving away from its core expertise and skewing towards more of a sales oriented organization! In my opinion, that is a severely undesirable move that dilutes their competitive edge against Airbus. Additionally, as Bruce mentioned, it exposes them to variabilities in the supply chain and the risks of IP infringement.
As pointed out already, reversing this trend is challenging and expensive. The question I want to raise is:

Can Boeing use automation to bring the manufacturing of currently outsourced parts back in-house?

This strategy will:
1. Capitalize on the company’s engineering expertise and give it further competitive advantage
2. Reduce variabilities in the production process with the supply chain being much less fragmented and dependent on externalities
3. Require R&D investments upfront but could pay-off with significant cost savings in the long-run
4. Avoid a requirement of a significant scale-up in the workforce
5. Avoid the risks from political uncertainties on a global supply chain
The risks could be:
1. Another dramatic change in the company’s strategy – is the organization culturally designed to be nimble to such frequent changes?
2. Disruption to the timely manufacturing and delivery of aircraft orders and the launch of new carrier platforms
3. Cost effectiveness of the automated in-house manufacturing process in comparison to outsourcing