Contributed by: Sourabh Agarwala, CFA
What is wealth? asked Hari Balasubramanian, Chairman and MD at Ontrack Systems Ltd and a member of Indian Angel Network. The seemingly simplistic question set the ball rolling for an engaging and enthralling event targeted at nurturing entrepreneurial aspirations within CFA student & member body hosted by IAIP Kolkata on 10th May, 2014.
One participant prompted “Wealth is assets less liabilities as on date “, another participant added “assets excluding own house property as occupied property is an expense”. Smilingly, Hari quipped the old adage that Health is Wealth. The most important wealth for any person is his health. He added happiness, family, relationships, education; all good virtues are all the treasures and wealth of a person. It is very important that he strives to create Wealth.
Next Hari delved into the concept of Wealth Dynamics or how to create Wealth. He noted that Wealth is equivalent to multiplication of Value of a Person and Leverage. i.e. Wealth = Value of a Person X Leverage. Most of us do not understand the true value of ourselves and it is really important for us to introspect and find our true value on the basis of our strengths like skills, education, relationships etc.
However, more important question for of us is to know how to leverage our strengths to maximize Wealth creation. We often wonder that even though we are more valuable i.e. more educated/better network/ more skilled etc than the fellow person, then why the other person is able to create more wealth and seems happier. This question seems to bother most of us and all participants were eager to know the reason.
To answer this, first we need to know what leverage is and the concept of Wealth Profile of a person. A lever amplifies an input force to provide a greater output force, which is said to provide leverage. Wealth profile of any person is his natural path of least resistance to wealth i.e. if an individual utilizes his Wealth Profile correctly, he can amplify his strengths and his value to create greater Wealth. To understand one’s Wealth Profile, the person needs to map himself in the matrix in accordance to his characteristics/likings/traits etc.
The Creator: People of such profile bring in new ideas, innovative thoughts, are always on a look out for what new needs to be done and are a bit shy & reserved. Such persons can leverage their strengths by working on R&D projects, new products and on creative art fields. Examples Steve Jobs, Bill Gates
The Star: Extrovert people and they can magnify their personalities to create great brands. Good in leadership role where public follows them. Examples: Amitabh Bachchan, Barrack Obama.
The Supporter: They are excellent in people management and know from whom to get the tasks done. Best CEOs are generally of Supporter profile. Example: Steve Ballmer.
The Dealmaker: These persons are excellent in networking and leverage their relationships to execute transactions. Good in deal making activities like banking, real estate. Example: Donald Trump.
The Trader: They have ear in the ground and have excellent sense of timing. Good in technical analysis and short term trading. Example: Harshad Mehta.
The Accumulator: People of such profile have an excellent eye for detail, do good data analysis, have long term view and are not frank in speaking their thoughts. Such profile is suitable for CFOs, Investors. Example: Warren Buffet.
The Lord: Such people are similar to land lords and are excellent in controlling cash flow producing assets like rental properties, cyclical industries. They are also good fund managers. Example: Lakshmi Niwas Mittal.
The Mechanic: People of this profile are always curious to know inner mechanics of home fixtures, toys etc and are good in replicating existing business models and processes to bring efficiency. They are successful in building big businesses and enterprises by building duplicable processes. Example: Michael Dell of Dell Computers and Ray Kroc of Mc Donalds.
Relevance of Wealth Profile
Any individual can identify his strengths on the basis of his traits, liking etc through Wealth Profile. Such person can leverage his strength by undertaking activities appropriate to his Wealth Profile or by undertaking activities in a way suitable to his profile. For example a person with Accumulator profile may fail miserably in short term trading. Similarly a Mechanic may not be successful in sales & marketing profile. However a Mechanic may be highly successful in making sales and marketing process lean and efficient. It is important to understand his strengths and undertake tasks leveraging his strengths.
Hari demonstrated the application of Wealth Profile by interspersing discussion with relevant examples like Amitabh Bachchan with Star profile did tremendously well in his acting career. When he tried to switch to Creator profile (promoting & managing ABC Ltd) he became unsuccessful. However as soon as he reverted to Star profile he became highly successful. Similarly Michael Dell with Mechanic profile has made Dell Inc known for innovations in supply chain management and electronic commerce, particularly its direct-sales model but the company has miserably failed in Creator profile activities like developing enterprise storage system in-house.
It is to be noted that chances of success in new ventures and executing projects increases significantly for a team consisting of people from different profiles. E.g. a person of Creator profile who is good in planning but pathetic in executing needs a Mechanic who can work on the plan. Similarly a Mechanic who is an introvert needs a Supporter to build relationships with third parties and marketing. Having a good team is crucial for being successful and Hari apprised the participants that VC firms give a high priority to ventures with good and diverse team and management during angel investing.
On a concluding note, Hari encouraged participants to live wholeheartedly, have courage to follow own intuition and NOW is the time take the plunge into entrepreneurship.