One of the current
trending news items in Business news is the status of India’s IT Industry,
which has been hit, seemingly hard, by the gale force winds of what seems to be
The Trump Administration’s new approach towards the US Economy. The impact, as
per two news reports I have read, is expected to be quite massive, at least in
terms of Jobs: the job loss is expected to be 56,000 in one year, and upto 2,00,000
in three years.
This is now more than
terrifying... this is turning into a virtual bloodbath... if true {IF true},
then my question is how could we be so underprepared? The answer : the exclusive focus, the singleminded focus
on current cash flows, current revenues, excluding any focus or analysis of the
future trends, emergent risks, technology & consumer trends... we need
to spend far, far more on investing in people at all levels, increasing their
knowledge base, sensitising them to long term trends. The current manager is
taught to think that reading is bookish; that the present is all that matters;
that statistics, trends are nor them.
This isn’t the first time
an Industry has been hit by large-scale gale-force external winds; though this
instance is by far and away the most visible. The Telecom Services trade is
also witnessing a similar external wind; though for different reasons. Another
example that comes to mind is the Handset trade, which has also been hit
brutally hard by external winds. In both cases, organisations have shut down or
been sold; there have been pink slips; tumultuous shifts in Market-Share as the
industry dyanamics changed course seemingly
overnight.
Let us take a closer look
at a couple of these instances, and see whether the changes were really indeed
overnight, and could they not have been either foreseen, or at the very least,
a rough estimate of the trend be prepared beforehand. Take the IT Trade, for
example. There were indicators aplenty; the
rising trend of protectionism, which isn’t a new trend, neither is it a
trend isolated to the USA is just one such example. This development was well
known before it struck. That is why
the massivity of the expected impact comes as a surprise. This trend has been
evident for some time now; it should have been anticipated by all of us. Similarly,
the domain specialists in this field have, for some time now, been writing of
the need for Indian Firms to step up the value chain, and get innovative. The
combination of these two factors accounts for the impact we are seeing!
Let us move our emphasis
to Telecom Hardware – the advent of 4G devices was a known factor. This should
have been anticipated, and yet wasn’t, not fully at any rate. The rising market-share
of Chinese players as well as the online players was another well known trend,
that should have been noted, and its import extrapolated. Yet, at least one or
two firms in my knowledge were stuck with high 3G stocks, leading to price
pressure. This is standard, first year marketing – new technology drives down
the prices of existing products on the path towards obsolescence. The power of
the internet as a disruptor again should have been anticipated. Some brands,
which anticipated both trends – succeeded in not only holding on to their
share, but also growing. The ones that didn’t, either failed or lost
market-share.
Telecom services is
another sterling example. The advent of additional players was, is and remains
a known factor. The dilution in ARPUs in the past 4-6 year is also a matter of
public record. The investments in the industry are again, exceedingly well
known. Balance sheets and their status is also on public record. Add to this
the on-ground competitive factors like
increasing competitiveness on retail counter shelves, lack of stickiness in
retail, erosion of pricing power at consumer level, as well as known advent of
Jio were all factors that are well known in the trade. All that is required is
the connection of all the dots.
In some cases, these
factors were connected well in time, the big picture successfully drawn,
appropriate decisions taken; these companies are today reaping the benefit of
these timely decisions. But the fact remains that by and large, Macro Factors are not usually connected up –
Patanjali is another example; there were a host of indicators that should have
indicated to the FMCG companies of big trouble on account of the Patanjali
factor. In each of the 4 examples analysed above, it represents an ill-timed
focus on the current, the now, and not enough {in some cases, zero} focus on
the future trends. Another factor is innovation; unless the firm & the
local industry is innovating, the risk that it is not growing in value addition
remains. When the Macro Environment changes, it is these innovative firms which
are at the edge of competence / skills and Technology developments, which
weather the impact and come out of the change phase in flying colours.
The current & the now
deserves our attention; any laxity in this sphere has crippling long term impacts.
That is beyond argument; but, at the same time, what is needed is a focused,
planned attention on the future in terms of Micro as well as Macro trends. The
Business Manager, probably starting from Junior-Mid Levels, {Third line in tall
structures, 2nd in flat structures} should be sensitive towards such
movements. This will help escalate relevant industry long terms shifts &
trends to top management; as well as help in upskilling these potential top
managers to read critical business factors. This small shift will strengthen
the organization in the mid levels, freeing
up top management time for criticalities. This isn’t easy to implement –
but needs to be done. You have to learn the skills for the top while you are
climbing the ladder; every manager must ideally invest in self on the way up;
that said – every company should also invest in upskilling its line & staff
teams in reading the business environment…
Comments
Post a Comment