This absolute gem was narrated by my father in law.
Once, he was sitting at a lecture being delivered by a senior person at Tata Steel. The lecture spoke a lot about the Padta system of accounting.
After the lecture was over, the floor was open for questions. My father in law raised a hand. He said, "Sir, you have spoken a lot about the Padta system of accounting. But I do not know what it is. Can you please tell us what is the Padta system of accounting?"
The speaker was stunned. "You have heard me speak for so long, but you didnt know what the Padta system of accounting was for all that time?"
"No sir", my father in law confessed.
The speaker looked across the room and asked, "Who else does not know what is the Padta system of accounting?"
Most of the hands in the room went up.
The speaker then asked them to site and explained, "Every morning, when we open the factory, we look at the order book and the production schedule, and decide, 'पड़ता है, के नहीं पड़ता है?" The room burst into loud laughter.
पड़ता है, के नहीं पड़ता है? is trade jargon in West India for "Is it profitable for me to do this, or not?"
But the lesson is deep. A factory, esp of capital goods like steel, can afford to look at cyclical demand and also suffer losses for a while. But if the general manager is asking, on a daily basis, Am I profitable today? That completely flips the perspective. To be profitable, even a little bit, everyday, is the key to being a sustainable, profitable business.
I have used this lesson in all my business advisories - Padta hai, ke nahi paDta hai.
The startup ecosystem now calls it positive unit economics.
Once, he was sitting at a lecture being delivered by a senior person at Tata Steel. The lecture spoke a lot about the Padta system of accounting.
After the lecture was over, the floor was open for questions. My father in law raised a hand. He said, "Sir, you have spoken a lot about the Padta system of accounting. But I do not know what it is. Can you please tell us what is the Padta system of accounting?"
The speaker was stunned. "You have heard me speak for so long, but you didnt know what the Padta system of accounting was for all that time?"
"No sir", my father in law confessed.
The speaker looked across the room and asked, "Who else does not know what is the Padta system of accounting?"
Most of the hands in the room went up.
The speaker then asked them to site and explained, "Every morning, when we open the factory, we look at the order book and the production schedule, and decide, 'पड़ता है, के नहीं पड़ता है?" The room burst into loud laughter.
पड़ता है, के नहीं पड़ता है? is trade jargon in West India for "Is it profitable for me to do this, or not?"
But the lesson is deep. A factory, esp of capital goods like steel, can afford to look at cyclical demand and also suffer losses for a while. But if the general manager is asking, on a daily basis, Am I profitable today? That completely flips the perspective. To be profitable, even a little bit, everyday, is the key to being a sustainable, profitable business.
I have used this lesson in all my business advisories - Padta hai, ke nahi paDta hai.
The startup ecosystem now calls it positive unit economics.
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