Listen To The Macro Trends - Or Lose Marketshare!

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…


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