The last few months have, in many ways, redefined the way we do business. We have seen the peaks and the valleys and it is only now that a slight uptrend has made its appearance.
In the midst of all this, companies have had to take a long hard look at their business models, and more importantly, at their leadership profiles.
There has been a feeling that in recent years, chief executive officers (CEOs) have moved away from their focus on building long-term competitiveness of their organizations to operational and financial management issues. This disproportionate amount of time spent on operations has resulted in a loss of strategic thinking and as a result, organizations may have lost out on opportunities that could have placed them on a new trajectory of growth.
While aggressive expansion may work in the current environment, a forward-looking CEO is likely to be more mindful of balancing different priorities—between the short-term and the long-term.
This has brought into focus the new-age CEO, someone who balances strategy with execution, who can take tough decisions in a challenging environment and who can handle the rough ride and still stay calm, and reassure employees so that productivity does not get affected.
In these tough times, Indian CEOs have additional challenges—addressing scarcity of talent and creating a competitive advantage in a growing domestic market. The new Indian CEO will need to embrace the following to be successful:
Donning a global role: Recent months have shown us that increasingly, the macroeconomic environment—both local and global—will affect Indian businesses. This translates into CEOs being able to understand, decipher and respond to the rapidly changing global environment, and more importantly, at the same pace.
Broadening the vision: As CEOs manage their growing businesses and grow shareholder value, there is a realization that they need to focus on an ever-expanding environment. The Tata group, Aditya Birla Group and more recently, Punj Lloyd Group have incorporated this skill-set in their leaders. This has enabled them to connect the dots and focus on the big picture while working on the micro issues.
Redefining decision making: Today’s CEO needs intellectual agility and creativity to respond to changing demands with new solutions. They must be also be able to cut budgets effectively, while still investing in critical capabilities the company needs to be ready with for future growth.
In fact, the current challenging external environment is an opportunity, since today, CEOs can make difficult, yet necessary, organizational changes that wouldn’t be politically acceptable during more robust times. Larsen and Toubro Ltd is an example of a forward-looking organization restructuring its business segments into a global conglomerate, a task which may not have been easy to implement in boom times.
Turning attention outwards: As organizations grow globally, they become more susceptible to whatever is happening around the world. ICICI Bank Ltd’s global expansion has made the organization focus on openness to dialogue, input from younger and diversified teams and incorporation of global working cultures.
Learning from the mistakes of others is another way by which CEO can build a sustainable organization. The leadership style needs to be more collaborative, where teamwork is the focus and individual performance is linked to the performance of the organization.
Earning respect and building credibility: It is no longer enough to grow through the ranks—what has become important is how one got to the top. CEOs must have the hands-on capabilities and understanding to drive the business and instill a culture of excellence. And they need to have donned all hats—be it finance, marketing, operations, sales, human resources or even risk management.
Building the right team: The best CEOs have figured how to invest their time in a way that aligns with the company’s agreed upon strategy and have built a capable management team across all critical functional roles and business areas. Today, CEOs need to involve themselves in the recruitment of their top people and ensure that everyone is an expert in their field and knows what they are responsible for.
Strengthening customer relationships: India is one of the largest domestic markets in the world, next only to China. While the unpenetrated numbers are huge, it is also a maze that companies need to chart their path through. Therefore, while acquiring new customers is every company’s mantra, success will come to those who identify their customer segments and then work on effective innovation.
Bharti Airtel Ltd and Nokia India Pvt. Ltd are two companies that have redefined segmentation and inventive marketing. In addition, customer loyalty can only be built if this is combined with enhancement of value, which may not always be monetary. This is especially true in a downturn, where striking the right chord can get you customers for life.
One unique strength that Indian CEOs have is the ability to internalize best practices from the West and adapt them to India. In addition, leaders of the most successful companies, many of them part of family-owned conglomerates, are more preoccupied with long-term strategic vision, talent nurturing and being the keepers of organizational culture—a trait that has served them well in these tough times.
What is important is not losing sight of these fundamentals in times of euphoria, where bonuses and profits hog the headlines. That is the true test of the CEO—since no leader has more of an ability to affect a company’s fortunes through his decisions.
Anjali Bansal is partner, Spencer Stuart, an executive search consulting firm, and leads the India practice. She is based in the firm’s Mumbai office
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