Product Development - Infinite Game [Adapted from Bala @LinkedIn]

 Product Development is an infinite game (according to Glenda Eoyang)

• It needs a long-live perennial value stream.

The rules of this infinite game are:

1. Inquiry

2. Adaptive Action

Inquiry

Answers have short shelf-life. Stick with the questions, therefore the focus on inquiry. The ability to continuously stand in inquiry is a core skill for working effectively in complex contexts.

The four simple rules for inquiry:

- Turn judgement into curiosity

- Turn disagreement into shared exploration

- Turn defensiveness into self-reflection

- Turn assumptions into questions

Adaptive Action

Adaptive Action is an elegant and powerful method for engaging with dynamical change in an ever-emerging, always self-organising world.

The three questions we have to pose are:

1. What?
2. So what?
3. Now what?

Scrum Guide 2020 Changes

 

Basel Norms

 Basel Norms - Basel 1, 2, 3

• These are norms, not mandates. However since all the international banks are integrated, it is advisable to follow the Basel norms.
• BIS - Bank for International Settlements. (Is the Bank of Central Banks).

Some key definitions

1. Tier 1 Capital (Core capital), is made up of
1. Paid up capital: When we start a company, our own funds we pump in are called Paid Up Capital.
2. Statutory reserves: Reserve to make you solvent + If we maintain the statutory reserve, the cost of insurance will be less).
3. Disclosed reserves: Say if profit is 50 lakhs, companies disclose a part of that profit and keep a part of it as Undisclosed Reserves. The disclosed part of it is called Disclosed Reserves.
2. Tier 2 Capital (Supplementary capital) is made up of 
1. Undisclosed reserves: The undisclosed part (above) are called Undisclosed Reserves.
2. Preference shares: Shares of Preferred Shareholders are called Preference Shares. Normal shares are of least priority.
3. Subordinate debt: e.g. MBS (Mortgage Backed Security):  

Upon liquidation of a company, order of preference (of money disbursement) will be

- Bond holder (debt), for example FD holder

- Subordinate debt

- Preferential shareholder

- Ordinary shareholder

Types of Risk

• Credit risk: 
• Giving a credit carries some risk
• Giving a loan with no mortgage - huge risk
• Giving a long to Govt of India - no risk
• Giving a housing loan - some risk
• Giving a car loan - more risk
• Market risk: 
• This risk is because of the market in which a company operates. For example, if the interest grows exponentially, what will be impact on bank operation? 
• If exchange rate grows, say USD = 90 INR, then what will be its impact on the bank operations?
• Operational risk: 
• This risk is the environment in which a bank operates. Floods, fires, hacking, frauds etc. are all externalities that banks have to deal with and impact their operations. 

Basel I

• Only credit risk was considered.
• There's no difference between the various kinds of debtors. Say a bank has not created risk profile of various debtors - vijay mallya, sahara group, indigo, infosys, etc. Each debtor carries a different kind of risk.
• In India, for individuals we have CIBIL and for companies we have CRISIL.

Basel II

• Considered all risks (Credit, Market, Operational - CMO)
• Capital Adequacy Ratio, CAR = 8%. The capital adequacy ratio (CAR) is a measure of how much capital a bank has available, reported as a percentage of a bank's risk-weighted credit exposures. 
• Capital is a measure of the financial cushion available to an institution to absorb any unexpected losses it experiences in running its business. For banks losses could be loan defaults; for insurers it could be a huge number of claims in the event of natural disasters. 
• Risk-weighted assets are the loans and other assets of a bank, weighted (that is, multiplied by a percentage factor) to reflect their respective level of risk of loss to the bank. For example, mortgages secured by residential property are generally considered. The greater the amount of higher risk assets and loans that a bank has, the higher its risk-weighted assets, and therefore, the higher the amount of capital the bank must have in order to meet APRA’s minimum capital adequacy ratios.
  
  
  
• For Tier I it is 4%
• For Tier II it is 4%

Basel III (New features have been added...)

• Widened the scope of operational risk. 
• Disclosure, that is more information is needed to be shown by the bank.
• To shareholders
• To the reserve bank
• To market
• Better capital quality (Now Tier I is 6%, compared to 4% previously).
• Counter Cyclical Buffer (CCB)
• The countercyclical capital buffer (CCyB) was one of the measures designed to improve the resilience of the global banking system following the global financial crisis (GFC). It is a bank capital buffer that can be raised or lowered by jurisdictions depending on the level of risk in the financial system.
• During BOOM, there is an oversupply of money in the market, consequently inflation will rise. Banks cut down the money supply thru various measures to bring down the inflation. 
• During RECESSION, 

Basel 1, 2, 3

 

BASEL I

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• Issued in 1998
• Focuses on Credit Risk and Risk Weighting of Assets
• Assets of banks are classified into 5 groups according to credit risk:
• 0%: (for example cash, bullion, home country debt like Treasuries)
• 20%: (securitisations such as mortgage-backed securities (MBS) with the highest AAA rating)
• 50%: (municipal revenue bonds, residential mortgages)
• 100%: (for example, most corporate debt)
• No Rating: 

Agile problems with AAG

Like most other companies, AAG too has been on the path to Enterprise Agility for several years, which is quite evident in the ways of working (Purple) of teams. Most teams have some sort of autonomy, are multi-skilled (full stack developers at least), and the deployment releases are fairly regular (with excellent CI/CD tool usage) and predictable. The feedback from the business too has been early, and adds value to the unit of work delivered. Encouragingly, it's fairly a widespread phenomenon, unlike in other companies where excellence is limited to certain pockets. 

While those are the positives, the negatives aren't too few, nor something that can be disregarded. Here I list some of the things that could still be improved with intent, right mindset and responsible leadership.

1. Lack of demand funnel. 
2. Program level prioritisation is cowboy-style individual feat (in that the heavyweights have significant say) than a collective exercise.
3. Leadership may not be democratic and likely non-aligned with goals and aspirations of teams.
4. Constant team flux, changes, team-movement.
5. Frequent ways of working model changes. 
6. Poorly defined feedback mechanisms for contractors. 
7. Perception-based judgements. 
8. Over-reliance on business analysts who double up as iteration managers.
9. Not an open culture in some teams, and fear lurking on the flanks with respect to team bigwigs. 
10. Last but not the least, Business agility is still in the stone age.

How to implement a Data Science project [Krish Naik]