In an interview with Outlook, the country’s leading management consultant, DrMrityunjay Athreya, talks about the new realities that the Indian corporate sector willhave to adjust to in 1996.
Indian corporates have to re-invent the rules of the game with imagination and guts
In an interview with Outlook, the country’s leading management consultant, DrMrityunjay Athreya, talks about the new realities that the Indian corporate sector willhave to adjust to in 1996.
What do you think will be the dominant trends in Indian management in 1996?
Predictions are generally hard and foolhardy. They are particularly so for 1996. It isnot a normal, incremental year. It is an election year. There are major uncertainties.They could lead to several possible scenarios. At least two basic scenarios can beenvisaged. One is that the 11th elections to the Indian Parliament return a reasonablystable government, which is likely to last at least three years, if not the full five-year team. The other is that there is an unstable government, which may last for about 12 to 18 months.
What will happen to the Indian corporate scene under each scenario?
In the event of a stable government, the following management trends are likely: highgrowth investment, greater globalisation, diversification, especially into core andinfrastructure, mergers and acquisitions, R&D take-off and social developmentcontributions. In case of perceived instability, I am afraid more of the following trendsmay operate: downsizing, reengineering, cost cutting and foreign outbound investment.
Which scenario would you personally bet on?
The advantage of being a consultant is said to be that you don’t have to bet. Itis the client who does! However, I am, on the whole, an optimist. I expect a stablegovernment. This is one prediction where even the cynics may secretly hope that I am, foronce, right.
In that eventuality, what kind of corporate performance do you expect?
In the first half of 1995-96, its performance was good. Due to uncertainties, tighterliquidity, etc, the second half, which is usually better, may not show the same rate ofgrowth. However, the second half is brisker than the first, and the fourth quarter,January-March 1996, will be at a peak. Since liber-alisation, corporate performance hasbecome less dependent on the annual budget of the Government. It now depends more oneconomic fundamentals. These continue to be good. We have had another reasonable monsoon.Real incomes are rising. Industry’s efforts on the quality issue through a variety ofapproaches such as ISO 9000, Quality Circles and TQM are beginning to pay off. So, bothconsumer spending power and the competitive prices should stimulate demand. With the endof election uncertainty in April or June, the stockmarket should revive. Raising equitythrough rights and new issues will be easier. Investment can pick up.
What about further structural changes?
Structural changes in the economy take longer to work out. Structural changes withinparticular industries will accelerate in 1996. Two opposite kinds of changes are likely intwo different types of existing industry structures. In highly fragmented industries likeconsumer goods, engineering and financial services there will be a trend towards moreconcentration through shakeouts, mergers and acquisitions. In the erstwhile state monopolyindustries, especially telecom and power, the trend will be towards more pluralism andcompetition. In telecom alone there will be about 40 new cellular operators and 20 newbasic service providers.
How does Indian management have to reorient itself to cope with these trends?
Indian managements are about to undergo a major new test. They need to make themselvesfully aware of this, sensitise their immediate team and also communicate to the entireorganisation. India will have the first general election after liberalisation. A historicresponsibility has been placed on the shoulders of Indian industry. The people will bewatching. Are Indian business leaders and managers going to be paralysed by electoralgossip and uncertainties? Indian industry needs to take a long-term view on thefundamentals of India’s potential and go for aggressive growth.
They also need to think and act like "virtual MNCs". India is, just in a way,one of the country markets. Indian companies should push for exports, using countrycompetitive advantages and their core competencies. They should keep in mind theincreasing autonomy of the market from party and personal fortunes. They should governtheir corporations through sound management models of mission, vision, long-term strategicplan, empowered organisations, innovative culture, flexible systems, action orientationand learning from feedback. They should look at 1996 not in unfavourable, wistfulcomparison with 1995, but as another stepping stone towards 2000 and the 21st century.