Managing in Turbulent Times: by CK Prahalad

What a fitting event to end to the whole program. It was a great one by CK. To be honest he was not at his best, I have heard him before (@ Interops last year) – I guess all that travel and jetlag and also the anxiety of catching the return flight in couple of hours from them didn’t help either I guess. Nevertheless was really good one and very informative. Let me summarize the points I got in the ensuing paragraphs.

According to him volatility is the biggest issue concerning business men who had never dealt with volatility like this before and many are not sure whether they have a effective business model to deal with such factors and their way of dealing can make or break the organizations in the days to come. Some of the volatility are coming from commodity prices (such as Oil), terror/genocide acts etc, foreign exchange fluctuations, governmental policies across the globe, climate change and policies regarding the same, consumer reactions and also sudden change in social pry. Is there a new way to deal with all these volatilities or discontinuities? This is going to be the biggest challenge facing organizations.

Also because of the financial crisis, which he feels is yet hit the worst (as the credit crisis is already the next big thing going to happen and what else will follow that is yet to know), there are lot of impacts the world is going to face. Some of them he could name are geopolitical impact, industrial impact, employment impacts, and currency impacts. There is going to be massive industrial and global restricting that is going to happen soon, many firms will file bankruptcy, there will be forced/opportunistic mergers, many governmental bailouts, massive layoffs and unprecedented unemployment, and lots of churns in the senior management all across.

The effect of this across organizations is going to vary depending upon how deep their portfolio is – whether they are into domestic or global, whether they have a single focus or highly diversified etc and the effect and the degree of it varies across this say 2X2 matrix.

Some of the advise he gave to deal with all these situations were to continue to save cash, wage a war on waste (be it inventory, receivables etc), don’t build stock or bench, lower your breakeven point, focus on core competencies, shift to newer business line as long as the same skill set is retained etc.

He even talked about the volatility sandbox and talked about different constituents of it but due to lack of time he could not delve into it. Whatever I could take down I am reproducing them here and hope that helps who understand it better (I understood to some extent),

- Global perspective, focus on core competency, Velcro organization, anticipatory initiatives, IT system and analytics, Focus on Risk, science based models etc

As per him some of the core drivers for this new economy are going to be, connectivity, digitization, convergence and social network. Technology penetration is not going to differentiate between the rich and the poor. The future services is going to be unique personal experience – the example he gave was charging tires for the truck company by the usage of it rather than making a huge initial capital investment (my example- recently a solar heater company has come out with pay by the meter of water used rather than paying upfront that huge initial investment) and he stressed that future is going to be providing that zero upfront cost and charging for the usage, pretty much the SaaS model for us. My feeling is, this billing by the service or Business as a service model will be the defacto standard in the days to come. CK even mentioned that this model will rise to much more data and much more business and business models. He cited the same tire example where in you will be collecting a whole bunch of information about driving habit, resting hours, way of usage and you will coming with a whole suite of offerings around it and in the end making much more business than the original model and also making the whole system more productive too (reminds of all the businesses that sprung because we removed the incoming tariff on cell phones and also reducing the cell to cell air time rates).

He also made mockery of what politicians in the west who are talking outsourcing is like exporting the jobs. He said it is not exporting jobs but importing competitiveness and he said protectionism will not survive or the economy based of protectionism will be ruined. He also said Indian IT companies not to worry about US policies on outsourcing or protectionism as it cannot survive with out it.

His last advice and a request to the gathering was that to support small companies as they are the nerve center of the whole system and they create the ecosystem and without small companies large corporations cannot leverage and thrive. I sincerely hope all those biggies are listening.

With this he concluded his speech, the event and with this I am concluding my blogs for this event. I have tried to capture without putting my bias or opinions into it to provide the reader the exact picture that the person intended to give but I have my own ideas, opinions and takeaways which I will be capturing separately on my usual blog home (http://blog.nasscom.in/emerge/). I had a great time over there and I hope I did justice to the job at hand (live blogging) – this was my first live blogging event and also hope readers liked what I did.

Thank you all and hopefully see you all next year.

Manjunath M Gowda, S7 Software

One Response
  1. Banknet India

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