There are no second thoughts to this, but leaders need to resist implementing the defensive mode in challenging times. Instead, they must choose steps that will make the organization ready for success. All of us know that just like the weather, the uncertain time can change or worse anytime, and it is always part and parcel of the environment, and some of the individuals or organizations have little or no control over these. Just like the severity of the weather, the severity of the uncertainty can both rise and fall at any time. As of now, the CEOs across the globe are working under a plethora of uncertainty alerts.
Additionally, also under the geopolitical context, companies are operating. Above all, there is a structural uncertainty prevailing. It disrupts several business models due to changes in technology and rapid changes like climate change, work, and shifts in the needs of the consumer’s tastes and preferences.
For instance, you can say how the companies are willing to change their tools and supply chains focus entirely on the electric drivetrains and minimum on the internal combustion engine. One of the other factors presents here is the regulatory uncertainty as businesses tend to grapple with shifting patterns of regulations, including tariffs and some shifts in the tax policy and international investment opportunities. In the last ten years, many worries are growing every day in the current global expansion.
Business Strategy of India in the Uncertain Times:
As a country, India is very versatile and is also one of the fastest economies in the world. Hence, with such a fast-growing economy, it is bound that the government will see both gloomy and bright days. For instance, over the past few years, India has been a victim of many uncertain times, such as demonetization, the COVID-19 pandemic, and whatnot. However, a developing country like India surely knows how to tackle its business strategies in such times.
Here is how India goes about doing:
Enhanced Planning: One of the biggest USPs of India has always been its improved planning. There are multiple sectors in India, such as agriculture, production, manufacturing, service, etc., and each one of them is just blooming. One of the most enhanced sectors today is the service sector, as India has become the hub of plenty of services. Over the years, whenever India has seen some uncertain times, it has always believed in enhanced planning to come with the right strategies. For instance, all the top officials of the multiple departments sit together and then get their hands-on planning by keeping in mind all the varied factors.
Robust Execution: In India, the execution part in the earlier stage was prolonged and steady, but with time and advancement of various sectors and technologies, India has been performing well on the execution front. Once the proper planning is done, and corrective measures are taken, the different cities and the state focus all their energies on seamless execution. In many of the uncertain times, India has always been ahead of providing the best of performance possible to help the citizens as much as possible.
Effective Policies: India is one of the most prominent countries in providing the most effective policies that come up in favour of the citizens. In the past, especially in uncertain times, India has always provided various policies that have helped the citizens tremendously, be it financial help or any other administrative help.
The Indian way:
Dr S Jaishankar is currently the Union Minister of External Affairs. He has written a book that is The India Way: Strategies for an Uncertain World, which has gained many prominences because it is from a career diplomat with four decades of experience. Above all, he has now graduated to a more effective policy-making, strategy-defining role and has gained a reputation for being reflective and intellectual. Now, it is time to think about how India will relate to a changing global landscape and its strategies to path a way to meet the national priorities. The book also aims to meet the global challenges that will help India balance its national interests with international obligations. To do this, Dr Jaishankar uses history and tradition. We can say that the book is all about his thoughts and personal reflections, instead of attempting to give out comprehensive structure about the domestic and international policy.
The leaders thought:
All of us know that leaders are humans at the end of the day, which is just wired, and they find it challenging to cope with uncertainty. The level of general emotional uncertainty comes up when these various uncertainty sources co-occur and exacerbate one another. Often people forecast the same by using extrapolating recent experience. People can quickly become unmotivated when it becomes uncertain if expected growth will materialize or not. They tend to react in predictable ways that are not always motivating post they receive information, leading to the confusing view.
You also need to take into account the heuristics which take place after periods of heightened uncertainty. Ideally, leaders minimize their investment freeze hiring, slash marketing, and brand investments. They prefer not to enter the new markets and not make decisions at all about investments. Such moves are entirely understandable, and they are necessary for the periods of uncertainty for sure. Both in the long- and short-time frame, they tend to be counterproductive. Now the question is, how do leaders manage or face uncertainty? The best part here is that we know from theory and practice the ideal approach and mindset to choose. But the catch here is shifting tides and mercurial weather systems, and the tricky winds which hamper the sail. Instead of just reacting instantly and responding to the informational noise, which is known as currently, the leaders can move proactively and nicely to make some changes in their methods. In uncertain times, the interlinked and attributes that reinforce mutually are essential for success. No matter what the topic, the message is applicable doesn’t change when it comes to strategy or workforce, operations or deals, tax and regulation, or finance.
Some of the strategies to know about:
- Dynamic strategy: Everything begins with moving to craft strategy in a new way. The earlier plan has been a linear enterprise that includes a definition of future vision or differentiating capabilities. It is challenging to have clear thoughts on the path forward when the atmosphere is highly uncertain. One of the most significant challenges amid uncertainty is managing the potential outcomes. It is because the economy at large has a plethora of competitors and consumers. Hence leaders need to have some clarity about what they will do and not do.
- Additionally, the strategy is all about testing and tweaking to alter external and internal changes, and it is essential to have a competitive advantage. When it comes to building an agile but dynamic strategy, technology and data play a crucial role. Big data and machine learning offer special learning abilities to integrate economic, corporate, and human behaviour. You can define a set of futures that are plausible and build a digital twin. It can create an image of how various uncertainty features can interact with each other if a market in one nation crashes. At the same time, another boom, teams can take into account a comprehensive range of scenarios. Companies mainly focus on building and scaling the capabilities that allow them to grow or reinforce competitive advantage under different situations pursuing such a path that creates a much greater sense of optionality. Irrespective of the cycle and level of uncertainty, it might also cause many actions and capabilities.
- Investing in the workforce: It is general for companies to minimize the headcounts in uncertain times. They also freeze the hiring places and keep some positions open. Hence, it is vital to choose the appropriate workforce for the organization’s size, which means companies can miss out on filling critical needs and areas by merely freezing. The crew can become quite agile by just investing in the workforce. The resilience to changes in the environment can boost the organization’s capacity to survive in uncertain times. Above all, leaders must know that uncertain times can take a toll on the organization’s employees.
- Create some valuable deals- Ideally, in uncertain times, the deal-making processes are paralyzed, which pushes the organizations to be both reactive and defensive. Businesses tend to walk on the path of inorganic growth. Organizations tend to focus on acquiring technologies when it comes to evaluating the deal opportunities.
The sift in manufacturing hubs and value chains – An opportunity for India.
Apple’s contract manufacturers and some other large global tech giants, including Samsung, have shown their interest in manufacturing mobile devices and components of over Rs 11 lakh crore in the next five years. It is under the new scheme of the centre which aims to boost electronics manufacturing.
The CEO of Niti Aayog Amitabh Kant leads the empowered group, which also features some other member secretaries of economic affairs, revenue, and the Ministry of Electronics and Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPI), and Directorate General of Foreign Trade (DGFT).
Additionally, the Communications and IT Minister Ravi Shankar Prasad said an extraordinary response to the PLI. The centre has also launched the PLI scheme to help several companies considering diversifying their supply chains away from China amid the sustained tension between Washington and Beijing over trade. Currently, iPhone maker Apple’s contract manufacturers, Foxconn and Wistron, have manufacturing units in the country.
The second-largest manufacturer Pegatron is also planning to set up its unit and in different states, including Karnataka, Uttar Pradesh, Tamil Nadu, and Andhra Pradesh. As of now, Samsung exports at least $2.5 billion from India.
Remote working the new trend:
Thanks to the current pandemic, all the governments have advised people to stay at home, and nonessential businesses must close down operations. But some of us have seen that people are seeking to return to some normalcy. Many companies have adopted work from home or remote working as the new normal to curb the widespread of the deadly virus.
For instance, the CEO and founder Tobi Lutke of Shopify recently tweeted that Shopify is digital by default. They choose to keep their offices shut until a new reality works out for them. The management feels that the office’s future is to act as an on-ramp to the same digital workplace that you can access from the comfort of your house.
Well, the CEO of Coinbase, Brian Armstrong, said that most of his employees will now have the option to work from home in the wake of the ongoing pandemic. The CE0 also believes that remote work is here to stay, and it represents a considerable opportunity and strategic advantage for the businesses. Some of the other companies which plan to offer work from home opportunities include Google, Microsoft, Morgan Stanley, JPMorgan, Capital One, Zillow, Slack, Amazon, PayPal, Salesforce.
The boom of EdTech, fintech, healthcare, and pharma sector:
By 2025, India’s pharma and healthcare industry has been projected to touch $100 billion, and it is one of the largest across the globe. Thanks to pharmaceutical exports, which stand at $20.70 billion in FY20. Nothing is surprising to know that the current pandemic has bought the pharma and healthcare sectors to the forefront. The industry is most likely to be mostly immune to the looming economic slowdown a few years down the line thanks to a surge in demand for healthcare and pharma experts.
For the EdTech sector, the year 2020 has been a game-changer too. As per the KPMG research, India is now home to at least 3500 start-ups with EdTech. Fintech is an ever-involving sector that has been one of the fastest-growing sectors across the world. The current pandemic has just accelerated the growth process. The industry is most likely to revamp its working model to lean increasingly towards digitization with an increased shift in consumer preferences and business strategies towards tech-enabled financial services. There is a widespread increase in trends, including Banking as a Service (BaaS), and people are also moving ahead to accept AI/ML-based assistants.
Digitization of business:
In a plethora of industries, digital transformation is driving business innovation for companies. It includes way more than merely updating the technology and processes they use. The design in businesses needs a lot of investment if it is done strategically, resulting in increased revenue. Another company that improved its digital presence was Target. They integrated new technology in their stores by introducing features like online ordering and enhanced their social media, web presence, and online sales to boost its market share. The company aims to help the customers discover new products and get easy access to the prominent labels they can buy online.
For instance, it has been proved that Nike has just done it as the top athletic and shoe company started feeling to become sluggish and outdated, so they just did a digital transformation of the mindset of the company. It helps in creating more membership opportunities and enhance customer experience online. Through apps, Nike has improved proved that it had made the efficient and effective use of digital consumer data.
The rise in the use of AI:
When it comes to combining AI along with Data, applied intelligence is one of your best bets. Even Accenture has done the same thing. The AI helps in scaling almost all the businesses today across nearly all the functions. The best part about AI is that it helps in supercharging the agents’ productivity with the help of virtual agents and automation tools. Additionally, it promises to offer timely delivery and make customer interactions based on context. The intelligent tools also claim to drive the customers to digital experiences, enhancing the quality and speed of resolution. Not only customer support, but the AI also helps in building an open and transparent supply chain, which accelerates visibility and collaboration.
The automated real-time flagging and resolution of disruption have been implemented to avoid expensive complications across the supply chain ecosystem. Experts say that companies must implement AI to prioritize case investigations, minimize false rates and improve the accuracy of rule targeting. Improve compliance with anti-money laundering, KYC, and some other regulations. Through non-rule-based detection, you can identify the criminal patterns which are emerging.
Wrap up:
We cannot agree to a point when the uncertain times will show up, but we say that companies must have a better chance of maintaining their balance even during the uncertainty period. The strategy building will allow leaders to make better decisions if they consciously lean into changes.
Written By : Prof. Tirthankar Nag
Designation : Fellow (IIM Ahmedabad)
Professor – Strategy,
Dean (Research & International Relations)
IMI Kolkata
He has completed his FPM from IIM Ahmedabad. He has a BE in electrical engineering from Jadavpur University and has been a consultant for companies in the energy and water space on behalf of PWC, KPMG, and SBICAPS, dealing with strategy, policy and regulatory advisory. He has been teaching as a visiting faculty for doctoral courses in the energy sector at IIM Ahmedabad and strategic management at IIM Calcutta.
