Summary of Conversations at our First Leadership Conclave    

The Conclave was held in partnership with XLRI, Jamshedpur on August 10-11, 2018 at Mumbai, India.

The discussion at the Conclave focused on choice of strategy in a growth-constrained, information-age economy.

Senior business and academic leaders shared their perspectives about the structural and cyclical factors that are causing demand and supply constraints on economic growth; the impact of changes in digital technology consumer preferences and industry value chains; evaluation of investment decisions, and; the role of leadership in a growth-constrained, information-age economy.

The consensus was that digital technology provides an opportunity for transformative changes in our personal, organisational and social life – changes that can improve the quality of life for a very large proportion of our population.  The realised value will depend on the investment we (individuals, organisations and the government) make in building capability to develop and leverage technology and create opportunities for wider participation in economic activity and social conversations – inclusiveness in its truest sense.

Given that the current digital technology-led information-age is in early years of evolution, different individuals and organisations are adapting to various technological changes at varying pace, resulting in the existence of a multi-generational workforce across sectors and organisations and a multiplicity of strategies and business & organisation models for building a sustainable growth business. We discovered many valuable abstract ideas through our conversations at the Conclave, which you may read about in greater details, in their context, in the following pages:

• Need for developing a deeper understanding of the context through critical and reflective thinking. Ideas in a context matter more than ideologies.
• Motivation, emotion and cognition depend on the context, and influence individual and group choices. Hence, adopting a Think-Act-Think Approach as more appropriate than the Act-Think-Act Approach
• While there is no limit to human ingenuity, we need to hold ourselves accountable to future generations.
• We need wider participation in economic and social activity in developing economies, which is the only way to create a just society. Developed economies need to focus on creating more value, as they have already reaped the demographic dividend. Else, we are bound to face constraint on economic growth and social development.
• Consumption and investment can grow only if earnings grow. A credit-led growth has its limits as seen during the global financial crisis and currently in leading emerging markets.
• Digital technology can help deliver ‘value by design’ rather than ‘value by serendipity’.
• Mobile and connectivity are providing a sea of big data, allowing us to reinvent consumer experience, which is expected to be a key differentiator in the future.
• Investing, organic or acquisition, across cycles essential for creating sustainable growth. Investment in digital technology, at this stage, is a leap of faith.
• While the theory does not encourage us to ask some questions, acumen does!
• Complex, uncertain context, combined with the recognition that we are boundedly rational, requires that we leverage tools like scenario development for making strategic choices.
• Structure, combined with the belief that dissent matters, helps get the best out of knowledge and experience that professionals bring to organisations.
• Shorter technology and business cycles, changing consumer preferences, disappearing industry boundaries and the increased rate of innovation diffusion requires us to place multiple bets.
• A platform approach (a portfolio of businesses, products, services, solutions and experiences), built around the core consumer purpose, can help build a sustainable growth organisation.
• In the long run, the ability to create and deliver value matters more than the price. Price can’t be the basis of a strategy or the consumer proposition.
• Leadership imperatives for a growth-constrained, information-age context include the ability to innovate, willingness to take risk (betting resources and leader’s personal reputation), be able to shed the arrogance of knowledge (learning to learn), build capability in the broadest sense (being able to formulate and solve problems rather than acquiring specific competencies), be willing to let go (ability to assess the probability of success dispassionately and letting go, if required), be able to manage a fractal organisation (small empowered teams), be an invisible leader who does not seek personal glory, recognise individual contributions with sincerity and always and create opportunities for purposeful work across levels.
• Above all, be able to lead and work with a multi-generational workforce. Recognise that if ‘the old have the wisdom, the young have the wings’.

Inaugural Session

In his inaugural remarks, Mr. Yogi Sriram, Senior Vice President (HR), Larsen & Toubro Limited, observed that the present environment is characterised by multiplicity of variables and is much more dynamic than anytime earlier. Complexity, combined with an increasing pace of change, requires us to let our mental models evolve as we develop a deeper understanding of the context.

Mr Sriram mentioned, “An ideology-based mental model does not serve the purpose in a dynamic context. We need to adjust our leadership style, not to the mental models which we are wedded to, but to the context.” A deep understanding of the context can emerge only through critical thinking, combined with reflective practice.

Mr Sriram mentioned that IASCC stands for helping us adopt a pattern of Think-Act-Think in a world which is busy with Act-Think-Act approach.

Prof. Anil. K. Sood mentioned that IASCC stands for learning together and creating opportunities for each other to learn. It involves building an eco-system of organisations and professionals who share this purpose. He highlighted that the collaboration with XLRI is a first step in this direction. He mentioned that IASCC would focus on the following core question:

How does a society build the ability to invest in its future, manage risk and resolve uncertainty and improve quality of life?

Prof. Sood noted that the IASCC’s work is dedicated to our families, colleagues and teachers, who help us learn through our life. Learning is key to human evolution and our questions define who we are and how we contribute to the well-being of our society. In other words, I ask, therefore, I am. He also mentioned that we need to build narratives where ideas matter more than ideologies.

Prof. Ramnarayan, Clinical Professor of Organisation Behaviour, Indian School of Business, narrating a Sufi story about a question from a master to a child about the source of flame, highlighted the fact that we can learn from anyone, and everyone who helps us learn is our teacher.

Prof. Ramnarayan also highlighted that eyeball control does not work in complex situations. While the human mind has limited capability to do calculations (as a calculator does it better), it has a phenomenal ability to discover and innovate. He noted that thinking is an emotional process. We think differently when we are confident and determined, as opposed to when we are not. Motivation, emotion, and cognition depend on the context, and influence individual and group choices.

Mr. Bhavesh Shah, Senior Vice President of Finance, Johnson & Johnson, noted that we have a phenomenal number of choices in current times, and therefore the subject of complex choices is an area of interest to him. He narrated a situation from his younger days when the choice one had was about going to school or not going to school. Children today are required to make many more choices at a much younger age than the earlier generations. It is, therefore, important that we learn the art and science of choice-making as early as possible.

Prof. P. Venugopal, Professor of Marketing, XLRI, observed that collaborating with IASCC, in joint pursuit of knowledge, was not a complex choice! He mentioned that XLRI’s Centre for Global Management and Responsible Leadership, started in 2010, seeks to understand what responsible leadership is, and he sees XLRI and IASCC exploring the idea together.

Dr Anujayesh Krishna mentioned that the times we are living in are different and complex, and therefore there is a need to understand choices in terms of the nature of complexity that they involve and the unintended consequences that they may trigger.  He also noted that the complexity and digital age is changing the nature of work everywhere.

Ms. Chitra Sood noted that one of the fundamental principles of life is that there is no limit to human ingenuity. More important than ingenuity is the need to be responsible. If one needs to be responsible for ingenuity, one needs to work and live in an environment where knowledge is free. She quoted Tagore, “where the mind is without fear, and the head is held high, where knowledge is free”. Mr Sriram recited the complete poem – highlighting the need for exploration and having an open-minded conversation.

Chitra mentioned that the conclaves of this nature will give us the freedom to think and explore. She referred to Prof. Ram’s Sufi story and stressed the need to find a way to help the teacher as well as the student to find the source of flame – we really need to bring together a synthesis of knowledge that makes human ingenuity responsible to our future generations.

Prof. Sood provided an overview of institute’s research programmes in each area of focus:

Individual and Family Choices,

o   Evolution of earnings with changes in individual & household capability, and

o   Nature of Urban Migration – its determinants and impact on Quality of Life.

Organisational Choices

o   Impact of zero-price or deeply discounted pricing models on consumer welfare and competitive structure of an industry,

o   Impact of technology on organisation structure, processes and culture and implications for employment contracts, and

o   Impact of fragmentation of value chain on realisation of value by consumers, e.g., who owns the consumer and thereby takes the responsibility to deliver the promised or expected value.

Public-policy Choices

o   Impact of low-interest rate environment on resource allocation choices of households, organisations and the government, and

o   Role of credit in accelerating consumption for households, investment by firms and public spending by the government;

Reflective Practice

o   Evolution of individual mental models in various indeterminate situations, and

o   Shared mental models and Organisation Culture

Prof. Sood thanked the participating leaders and invited them to participate in research (e.g., writing perspective papers, reflective practice cases, reviews and critiques, etc.); conversations on issues of contemporary interest (e.g., forum and round-table discussions); education (e.g., sessions through virtual classroom, mentoring of young professionals and doctoral students), and; fellowship awards programme for doctoral students.  He announced that two such fellowships have already been instituted at IASCC.

Session I: Characteristics of Growth-Constrained, Information-Age Economy

Panel Speakers: Mr. Bhavesh Shah and Prof. Anil K Sood

Prof. Sood stated his premise about human nature saying that he has never met anyone who does not want his or her children’s life to be better. He also argued that we are all willing to work hard to make our and our children’s lives better. If this be the case, nothing can stop an economy from growing. We give up only when we don’t see any hope. Therefore, it is important to fight the narratives that cause hopelessness or helplessness to set in.

Prof Sood also mentioned that technology is an enabler. Given that any significant change in technology causes discontinuity, it is important that we prepare ourselves for opportunities that each discontinuity creates. He argued that the current digital evolution has potential to create many more jobs, though these jobs will not necessarily be the same as we have created in the past.

Referring to the results of RBI’s Consumer Confidence and Industrial Outlook surveys about the current situation, Prof Sood highlighted the fact that there is a divergence between how consumers and producers are seeing the current situation – consumer is seeing a struggle but the business thinks that it is doing well. If the progress has to happen, we have to have a convergence of expectations among consumers and business. The question therefore is – what can help achieve convergence where the households and businesses have a greater positive outlook?

He presented the data on GDP growth for India and highlighted the fact that GDP growth has fallen during the last few years and we have had two consecutive droughts in 2014 and 2015. That is probably one of the reasons contributing to lower consumer confidence. Comparing India’s per capita income with the global average, Prof Sood highlighted that India needs to grow and has great scope to grow, as India’s per capita income is less than 1/7^th of the global average of ~USD 10,000.

He further highlighted that the aggregate saving rates have been coming down. While the household saving rates have come down significantly during the last few years, the corporate savings have been going up. Prof Sood mentioned that this is probably one reason why households and businesses are holding two different world views. Mr Sriram mentioned that an average Indian is probably consuming a higher share of earnings, given the stage of development in India, as it is natural for consumption to go up as people spend for improving the quality of their life. Consequently, we will expect the saving rate to fall.

Prof Sood argued that a declining savings rate compromises a household’s ability to invest in its future and thereby the economy’s ability to invest and grow in the long run. He mentioned that China has sustained its savings as well as consumption rates at higher level over the years and it is also able to invest significant sums in R&D, enabling it to challenge the US. The US median income has been stagnant for a long time, whereas the real wages in China have grown consistently during the same period.

The next question is, if the corporate earnings are growing why is the corporate investment not growing? One of the reasons for lower investment is that the shareholder returns have been falling and are about half of what they were at the peak (a fall from 20% in 2007 to about 10% during 2016). He further argued that the asset and capacity utilisation has been very low, thereby lowering the need for investment. In addition, Prof Sood highlighted that the level of corporate leverage is high, which compromises the ability to invest even when the business has an opportunity to invest. India needs to deleverage its business as well as bank balance sheets. We need much more equity than we have today, which implies that the Indian financial investor would need to take more risk, if growth has to be financed wisely.

He then referred to the 3^rd engine of growth – government expenditure. He highlighted that the government spending (% of GDP) has been coming down, even when India has had two successive years of drought. He mentioned that the development expenditure as a % of government spending has also been coming down.

Citing a quote where George Bush had talked about food prices going up as the Indians and Chinese were consuming more with an increase in their income, Prof Sood stressed upon the need to look at narratives and information more carefully.

He shared an example of how commodity prices did not collapse when demand collapsed after the global financial crisis and they flared up even when there was only a marginal increase in demand (followed by a marginal reduction in inventory). He highlighted that we have a huge amount of food wastage in the entire value chain (closer to consumption in developed world and closer to production in the developing world) and asked a question – why was narrative about the Indians and Chinese eating more and thereby prices going up accepted? Why is that we did not ask – how to reduce wastages so that we can feed our people without having to worry about growth in production and still keep the prices at affordable level?

He concluded his part of the session by mentioning that we do have structural as well as cyclical growth constraints (lower growth in household earnings, reduction in household saving rates, collapse of corporate investment, high corporate leverage and the decreasing rate of growth in government spending even under adverse circumstances).

And, we do need to find ways to release these constraints by creating much greater number of opportunities to grow household earnings and savings.

Mr Bhavesh Shah presented his perspective on the characteristics of information-age economy. Mr Shah referred to 3 must watch movies (Moneyball, Gatekeepers and Twenty-One) to highlight the fact that analytics have been used across different fields for a long time. However, the difference today is that the usage is much more pervasive.

He further highlighted that introduction of technology does not necessarily have to result in a loss of jobs – ATM reduced the need for tellers but some of the tellers were able to move to customer-facing roles involving relationship management and providing financial advice. Responding to Bhavesh’s remarks about autonomous vehicles impacting the employment level of drivers, Mr Manoj Niranjan mentioned that we still need pilot to land planes. Building on Bhavesh’s argument about loss of employment, Mr Yogi Sriram drew attention to the high level of disguised unemployment in a country like India.

Mr Shah stressed the need for increased internet penetration in India so that we can help reduce the digital divide. Increased internet penetration will allow the country to leverage high mobile penetration. He also mentioned that we have to bridge another form of digital divide, as people across generations differ in their ability and willingness to use technology. He further argued that India needs to take more and more government services to a digital platform.

Mr Sriram asked an exploratory question – Do we observe a consumption spiral in countries where internet penetration is high, as there no place to hide in the internet economy?

Mr Shah shared a video that he found really inspiring. Video is about how technology makes a difference to the farming community – Bringing Artificial Intelligence to Agriculture to Boost Crop Yield – A Microsoft & ICRISAT joint project.

Mr Shah concluded his session by saying that we must find ways to leverage technology and determine where it really helps rather than worrying about whether it does or does not.

Session IIA: Key Structural & Cyclical factors causing Short-term & Long-term Potential and Realised Global & Indian Economic Growth to be Low, Dr Sajjid Chinoy, and

Session IIB: Role of Credit Availability, Interest Rates and Public Spending in Enhancing Growth Potential, Mr Madan Sabnavis

Panel Moderator: Dr Sathyan David

Dr Sajjid, Chief India Economist, JP Morgan, outlined where he thinks the global and the Indian economy are headed – juxtaposing both the short-term challenges and long-term drivers of potential growth.

Dr Sajjid mentioned that the dark shadow enveloping the global economy after the global financial crisis has finally lifted, as we have had first year of synchronised global growth during 2017, i.e., above trend growth across the US, Europe and China.

Global consumer and business confidence are at the highest level in last 15 years. Europe and Emerging Markets, excluding China have experienced higher credit growth. US has seen consumption drive growth, as household income expectations have begun to move up. The US unemployment is at the lowest level in 30 years, though the wage growth has been muted.

Expected Global Growth: Structural Challenges and Policy Rhetoric

Dr Sajjid outlined the challenges that the global economy faces in the short to medium run. Bond-yields in emerging markets are a source of near-term stress. But the stress is not affecting the global economy generally, as we have not seen a material tightening of monetary conditions outside Brazil, Turkey and India. However, a strengthening dollar may prove to be a big risk, as the emerging markets have contracted large amount of private debt, which remains unhedged. With a material strengthening of US dollar, there is a risk of balance sheet stress in many emerging markets.

Risk that has come to table during 2018 is that the global recovery is beginning to become more desynchronised – US is surprisingly high at 3.0%+ but European growth is struggling to cross 1.5%.  Desynchronised growth implies stronger US dollar, which does not bode well for emerging markets, particularly for the ones where the level of private sector US dollar debt is high.

At a time, when the global economy is carrying the risk of desynchronised growth, it also runs the risk of a trade war. Dr Sajjid did not see a major risk from direct impact of US imposition of increased tariff on Chinese imports and automobile imports (largely from Europe) unless the US imposes a 10.0% tariff on all Chinese and European imports and China and Europe retaliate. While the direct impact of trade war may not be large, it impacts the sentiments, particularly the investment sentiment. Given that the cost of capital, corporate profitability and business confidence are three key drivers of global capex, a month-after-month conversation about the trade-war can cause the business confidence to collapse, thereby derailing the global capex.

In the medium term, the global economy faces a larger challenge – a sharp decline in potential growth across the world – particularly in the US, where labour force participation as well as labour force productivity have both come down secularly and structurally.

Labour productivity has peaked during the tech-boom era of early 2000s. Dr Sajjid quoted Robert Lucas saying, “I can see computers all-around, but I don’t see them in data”. Global productivity growth during the last 6 years is materially lower than the pre-financial crisis period.

On labour force participation, the challenge is that the large economies have already realised the demographic dividend. Low population growth, combined with aging population, lowers the potential to grow.

Given the present rate of growth in developed markets is close to their potential growth and the level of unemployment is at the lowest level in 40 years, the central banks may need to raise the policy rates very sharply. Else, the developed countries run the risk of inflation getting out of control. He mentioned that the bond markets are not pricing the risk of policy rates going up that sharply.

Economic Growth in India: A Policy Trilemma

Coming to India, Dr Sajjid mentioned that there has been a smart growth recovery during the last few quarters though it may be a pull-back from the stress of demonetisation and GST. As growth has picked, both internal and external imbalances have quickly begun to widen again – core inflation (net of food, housing, fuel, petrol, diesel) has jumped from 4.0 to 5.5% and trade deficit is at the highest level in 5 years. In other words, the output-gap is closing.

India’s current account deficit had declined from USD 88 billion during 2012-13 to USD 18 billion during 2017 (largely on account of reduction in oil prices), causing rupee to appreciate. It has now started to go up, as exports have under-performed, imports have been very strong (accentuated by demonetisation and GST implementation), and the global oil prices have gone up.

While the GDP growth had been slowing down, the current account deficit has nearly tripled from USD 15 billion to USD 50 billion last year. During the current year, the current account deficit is expected to be about USD 75 billion, as the oil prices are tracking high. This will not be easy to finance, as the FDI is tracking at about USD 40-45 billion.

While there is no risk of crisis, there are fissures that are opening up. When oil prices collapsed, it resulted in a windfall equivalent to 3% of India’s GDP. Now that the oil prices have gone up, all the processes are reversing. India is now getting a negative terms of trade shock. We expect rupee to depreciate. The policy implication is that one must not fight this depreciation as this is an equilibrium phenomenon.

He suggested that India must accommodate a gradual, calibrated, non-disruptive rupee depreciation that will improve the underlying competitiveness. Since it will add to inflation, it will require monetary and fiscal tightening. While low food inflation has been too much of a good thing (as a result, the farmers are struggling though the urban consumers are experiencing lower food cost), the core inflation is running much higher, the input prices are rising across the world accompanied by demand recovery.

On fiscal side, India is creating a bit of trilemma. India’s consolidated fiscal deficit has not come down despite the oil windfall. The Centre has brought its fiscal deficit down, but the states have undone that. It is a troubling phenomenon from the bond market perspective, as it is difficult to absorb large bond issues year after year.

Secondly, India is trying to reduce financial repression by telling banks (lowering the statutory liquidity ration) to reduce their holding of government securities so that they can lend more to the real economy. It has also reduced the ‘hold to maturity’ limits for its banks, resulting an increase in ‘marked to market’ losses for the banks. At the same time, India has capped foreign investment in government bonds.

As the deficit continues to be elevated, an upper limit on foreign investment means that the domestic institutions must finance this deficit. Since the banks are already holding government bonds in excess of their SLR requirements, they have no need to buy more. The change in ‘hold to maturity’ limits implies that they are booking an increasing amount of ‘marked to market’ losses. The Public Sector Banks (PSBs) have gone on a ‘buying strike’. All of this means that we will have structurally steeper yield curve.

While there are many short-term challenges, there have been meaningful reforms during the last few years, e.g., efforts to resolve the bank balance sheet, GST streamlining, new monetary framework and the focus on direct benefit transfers. But these reforms are likely to take time to show results – may be between 5 to 6 years. The key is to be conservative and put a premium on macro-economic stability over the next one or two years.

Mr Madan Sabnavis, Chief Economist, Care Ratings, mentioned that he would discuss four aspects – availability of funds, cost of funds, public spending and growth. He started his discussion with the question – is the Indian economy really doing well? Are we happy with the number going up from 6.7% to 7.5%? Earlier, we have had people arguing that India is 9.0% or 10.0% growth economy and high-growth rate is here to stay. At present, everyone is saying that growth will be higher than the last year. But no one is saying that it will be 8.5% or 9.0%. It will probably take two or three year to reach 9.0% level.

Economic Growth in India: Why is taking time to accelerate?

At one point in time, we felt that the UPA was governing poorly – scams, stalled projects and policy paralysis. We had a new government and a lot of reforms were introduced. Now we have realised that even when the projects were being cleared by the government, the number of stalled projects continues to be high. Gross and the fixed capital formation rates have fallen significantly.

At the outset, we must be bold enough to accept that the grand reform of demonetisation did shave off economic growth. We still need to find if there have been benefits or not and will have to wait for some time to know. While we needed GST to be implemented, the fact remains that the SME sector has been affected adversely. The sector is probably coming back on track and that is why growth is beginning to improve.

As for infrastructure, while we have covered a lot of distance, we still have a long way to go. We need to distinguish the policies that are introduced, or the announcements that are made from the reality that exists. Have we fundamentally changed the way in which the economy operates? Mr Sabnavis referred to UDAY (Ujwal DISCOM Assurance Yojana) scheme where the debt has moved from distribution companies to the respective state governments, i.e., the state governments are now required to service the DISCOM debt from the state budget. State governments are constrained by an upper limit of 3.0% on fiscal deficit and hence have a limited ability to invest.

IBC (Insolvency and Bankruptcy Code) is a great reform, but a genuine entrepreneur is asking – what happens tomorrow if he or she is not able to pay the loan? At the same time, there is a need for clarity about the purpose of these reforms. RBI says that we must solve the NPA (Non-performing Assets) problem, but the government says that the power sector must be exempted. If the sector specific exceptions that the government is asking for are accepted, it risks the revival of same old practice of not willing to recognise the NPAs. Corporate Debt Restructuring (CDR) has been tried to resolve the NPA problem but did not work. Since there is no resolution in sight, the NPAs have gone up and the public sector banks are being hauled up for letting the NPAs increase. Consequently, India faces a situation where the bankers don’t want to take decisions, fearing that the investigating agencies will go after them even in their retirement.

Every time RBI talks about increasing interest rates, we have the entire corporate world saying that we must keep lowering interest rates. RBI is always under pressure to lower rates, as interest cost is being positioned as the main determinant of growth in investment, which is not necessarily true.

In short, if the government is not able to spend, and the industry is not spending, how does one expect growth to accelerate?

Need to accelerate Growth in Earnings to accelerate Growth in Demand

The basic problem that we must address is the lack of demand. Demand comes from consumption, investment, government spending and exports. Consumption is not growing fast enough, as the annual growth in salaries is low and not many new jobs are being created. Not that no sector is creating new jobs, just that the number of sectors creating new jobs are not many. Companies are replacing people, but not creating enough new jobs. NBFCs are doing well, but the banking sector is not employing more people.

We often hear that the young are not employable, as the nature of education is not aligned with industry needs. If employment does not take place and income does not grow, the consumption also cannot grow.

While there is a decrease in inflation (prices are not going up as much as in the past), but the cost of living has been going up for a long time. If the cumulative inflation is higher than cumulative increase in wages/income, the consumption growth will naturally slow down after some time. Given that wages have not gone up in line with the increase in cost of living, and the employment level has also not grown, we can’t expect consumption to go up.

We want rural demand to go up, as rural demand creates demand for industrial sector. We know that food inflation has come down. If prices crash at the time of harvest, the farmer’s income suffers and if we have a drought, the production falls and the farmer still does not make enough income. Rural demand can’t grow unless farm incomes grow.

Why is investment not taking place?

Investment is not taking place in manufacturing, as the capacity utilisation is low. Typically, the investment starts taking place when the capacity utilisation reaches about 80%. Capacity utilisation has been remaining low for many years and is in the range of 72-75%. At present, the capacity utilisation is beginning to go up, but we must wait to see if it is a post-GST restocking or there is a genuine increase in demand. Some sectors are investing but we don’t have the kind of acceleration that is required to produce 9-10% growth in GDP.

As for investment in infrastructure, PPP (Public-Private Partnership) arrangement has not worked out well. The private sector is hesitating to invest, as there is uncertainty about availability of funds – given the condition of our banking system. The central government capex is only a drop in the ocean, as the central government invests less than 2% of GDP on infrastructure. Consequently, the private sector has to start investing for investment growth to take place.

Economic theory tells us that the government should primarily focus on redistribution, the investment must come from private sector. We want the government to do, what the private sector should be doing. However, if the government slips on fiscal numbers (fiscal deficit at 3% of GDP), we have rating agencies saying that the government is reckless therefore India’s rating needs to be downgraded. Consequently, the government is very apologetic about a slippage and resorts to desperate measure to control deficit.

The state governments are also facing a constraint on their ability to spend as they have taken over the DISCOM liability. Once the consumption sops (sewing machines, sarees, etc.) are accounted for, the state governments have very limited room for investment.

At the end of the day, government is not spending, industry is not spending, and the individuals are not able to spend, and therefore growth is constrained.

Once the demand recovers and the investment starts to grow, we would need to find a way to finance it. Investment can be funded by banks, corporate bonds, NBFCs and external commercial borrowings.

India is largely a bank economy. Bank lending is stalled for fear of being prosecuted, particularly the public sector bankers. Small businesses with sub-investment grade rating can’t really raise finance from the corporate bond market. Coming to ECBs, the cost, after accounting for exchange rate risk, is not too different from domestic borrowing. Consequently, we have a limit on growth, which comes from the ability to finance growth. As of now there is not much demand for credit and therefore are not experiencing a credit constraint. But the credit constraint is real.

Mr Sabnavis stressed that the cost of borrowing is not an issue. If the economy is doing well and there is an opportunity to invest, the cost is not a limiting factor.

In summary, Mr Sabnavis mentioned that there is a need to revive demand, but that is not going to happen overnight. As long as the NPA problem continues, the potential for growth will be low, as we can’t use credit to accelerate growth. India has still not resolved the problem of bank recapitalisation, as it has largely depended on book entries (recapitalisation bonds) to show that the banks are better off.

Dr Sathyan David, former Chief General Manager, Reserve Bank of India, suggested that the Indian economy is beginning to grow, particularly some of the lead indicators like stock market performance, air-travel, etc., are pointing in the positive direction. He stressed that NBFCs are filling the void left behind by the banking sector. As for the cost of capital, the policy rates are a double-edged sword – central bank can’t be too early or too late in adjusting the rates. Dr David mentioned that growth has to be accompanied with equitable distribution and employment growth. He stressed that there is a need to consider uncertainty that surrounds growth in global economy.

Dr Nageswara Rao asked a question about nature of spending by the government. Mr Sabnavis mentioned that the central capital expenditure is less than 2% of GDP and about 1/3^rd of that is for defence. Dr Sajjid mentioned that the states are spending a little more on capex (including UDAY related spending), even with their present deficit level. Responding to a question about ‘Make in India’, Mr Sabnavis mentioned that the purpose of ‘Make in India’ programme is to provide a policy framework and investment decisions are economic decisions made by the business.

Responding to Mr Kasera’s comment about the level of tax rate, Dr Sajjid mentioned that the tax to GDP ratio in India is still low. India’s challenge is to expand the tax base and bring in a shift from indirect to direct taxes, as indirect taxes are considered to be regressive.

Responding to Dr Manju Ghodke about exchange rate and inflation, Dr Sajjid mentioned that  INR depreciation is indeed expected to lead to higher inflation, but the positive side is that the exports are expected to become more competitive and it is also expected to discourage imports. Responding to Prof Pandey’s question about core inflation and pricing power, Dr Sajjid mentioned that the increase in core inflation, at present, is probably not as a result of pricing power that the firms enjoy but a result of an increase in input prices and the depreciation of rupee, arising from increase in commodity prices. Consequently, we have a situation where the capacity utilisation is low, but the core inflation is beginning to accelerate.

Session III: Evolution of Digital Technology and its’ Impact on Consumer Preferences and Industry Value Chain 

Panel Speakers: Mr. A Vaidheesh, Dr P Gopal Sarma and Prof. P Venugopal (Moderator)

Prof. P. Venugopal introduced the topic by observing that digital technologies have already impacted consumers and industry through micro-segmentation, enhanced consumer experience and use of dynamic models across the value-chain. There is now a need to look at other possibilities and the big picture.

Healthcare by Design

Mr. Vaidheesh, President, South Asia & Managing Direction, India, GlaxoSmithKline shared his experience about the role of digital technologies in healthcare sector. He noted that while India has many islands of excellence (in healthcare sector), it does not have an integrated health care information system. Current challenges include lack of integrated databases, sub-optimal alignment in various stakeholders’ objectives, and lack of access to information and knowledge.  Digital technologies provide the means to address these challenges and enable the transition from “healthcare by serendipity” to “healthcare by design”.   Mr. Vaidheesh noted that technology can alter the way healthcare is delivered by integrating stakeholders and developing a patient database which could lead to, among other things, mapping of various disease profiles.  He felt that implementation of National Health Protection (NHP) will be a significant step towards leveraging digital technology.

Knowledge Sharing by Leveraging Technology

Mr. Vaidheesh spoke how GSK is leveraging technology to share knowledge with doctors.  The sale force now has knowledge transfer targets. He added that, at this point in time, the investment in technology is a leap of faith that it will enable better business results, establish increased amount of trust with doctors and improve profitability.

Reinventing Consumer Experiences

Dr Gopal Sarma, Vice President and Distinguished Engineer, IBM GTS Labs, shared his experience about how digital transformation and Artificial Intelligence (AI) are leading to deeper insights and changing commerce and marketing strategy in every industry.

Dr Sarma noted that there is a significant change in how consumers engage with brands. While 81% of the companies say that they have a holistic view of their customers, only 37% of consumers say that their favourite brands understand them. This great consumer experience divide leads 89% of the marketers to say that customer experience will be the primary differentiator in future.  Dr Sarma pointed out that Gen Z is mega mobile generation, and their hyper connectivity leads to “sea” of big data, which can be used to develop 360-degree view of consumer and re-invent consumer experience through the use of cloud computing and artificial intelligence.

Prof. Venugopal summarised the two presentations by noting that digital technologies can now facilitate stakeholder integration and provide holistic customer experience. He further noted that digital revolution has led to B2B becoming B2C to it can now be B2I (Business to Individual). 

Mr Sankara Narayan asked if digital is really a differentiator? Responding to him, Dr Sarma mentioned that the last best experience is becoming a reference and therefore the bar keeps increasing every time. Consequently, digital becomes even more critical for designing customer experience. Responding to Ms. Menon’s statement on decision about investment in digital technology being in easy one, Mr Vaidheesh mentioned that it is a tough call, as the current customers and competitors are not in digital space, but future ones (young professionals) are. It is a leap of faith, therefore.

Mr. G V Kumar mentioned that technology is leading to a lot of disintermediation and is it possible that technology will lead to disintermediation of brands? Mr Vaidheesh mentioned technology will have a critical role at the hospital level but not necessarily in the consumer context, where brand may matter only in some situations. Responding to the question about standardisation, Mr Vaidheesh mentioned that we do have a fairly good progress on standardisation in the health insurance and healthcare industry. In response to the question about how GSK incentivises it sales staff, Mr. Vaidheesh mentioned that sales is a lag indicator and it can result in the team being focused on sales and not always invest their effort in activities that help generate sales. Therefore, they use a sales readiness index (a lead indicator), which combines scores on knowledge, understanding GSK’s value proposition and in-clinic sales effectiveness.

Session IV: Evaluation of Investment Decisions: Financial Perspective

Panel Speakers: Mr. Manish Vora, Dr Shekhar Damle and Prof. M C Srikanth (Moderator)

Prof. Srikanth, Professor of Infrastructure Finance, IASCC, Hyderabad, India introduced the topic by emphasising the importance of investment decisions as they have long-lasting impact. He stressed that it is important to manage the timing of investment decision.

Mr. Manish Vora, Vice President and CFO, Johnson & Johnson, identified, with the help of participating leader, potential for future growth, weighted cost of capital (with inflation and interest rate factored in), resource availability, risk-appetite, availability of new technology, leap of faith that helps disrupt the market, and the current demand-supply gap as the main determinants of investment choices. He also referred to risk appetite and CEO preferences being the factors that influence investment decisions.

Mr Vora emphasised that the decision criteria often depends on the nature of investment project. For example, an investment in distressed assets, an investment at a low of cycle or investment in a moon-shot project is very different from a capacity expansion investment in a relatively stable business.

Investing through Cycles: Timing does Matter

He suggested the following set of overarching questions for all investment decisions:

• Is the industry going through up and down times?
• Has the market already priced in low levels of returns?
• And finally, if the firm does not make the decision today, will it exist tomorrow?

Responding to Mr Manoj Niranjan’s question about the impact of culture on choice, Mr Vora mentioned that context is indeed important, and each society’s culture does have an impact on organisation choices. Mr Kasera mentioned that the investment horizon is also a function of the product life-cycle. Mr Sankar Narayan emphasised that the technology life-cycle is an important input for deciding the timing of investment decision. Mr Menon mentioned about the use of real-options in investment decisions. Mr G V Kumar mentioned that investment in high obsolescence business is a continuous cycle. Prof Pandey mentioned that investment is indeed a continuous cycle across many businesses. Mr Tahiliani suggested that infrastructure businesses like Oil & Gas do have a defined investment cycle as the gestation periods are long and the business involves large investments. In other words, the timing matters in businesses which have large discrete projects. Responding to Mr. G V Kumar’s question about the allocation of a specified amount to investment projects year on year, Mr Vora mentioned that they do keep aside a certain % of sales for investment in R&D, which allows them to invest continuously in innovation projects.

Dr Chandrashekhar Damle, Co-founder, Udvik Infra Advisors, emphasised the need to marry theory with practice and covered various practical considerations relevant to investment decisions in an uncertain context. He cited an example from his experience where the chairperson of his firm argued for attaching less importance to project IRR and insisted on knowing about the proportion of returns that comes in the last five years of a long-gestation project. While the theory does not encourage us to ask that question, the business acumen does. The question really integrates the idea of payback with probability of success. A project returning 60-70% of cash flow during the last five years in inherently risky.

Bounded Rationality Investment Decision

Dr Damle noted that even after initial investment decision is made, it remains “open” and requires regular review to assess its viability, and sometimes “stop loss” and “exit” choices also need to be considered.  He suggested that investment decisions, even in cash rich environments, need careful thinking, as they may crowd out future opportunities. He also emphasised the need for sensitivity analysis over a much broader range (say, 25% to 35%) to identify the threshold over which project still remains viable. He emphasised that the currently available simulation technology is easy to use and helps assess project risk without a lot of effort.

Dr Damle argued that there is a need to build base-line projections into the review plan and assess the value of investment on a regular basis to see if the it is delivering to base-line projections even in the changed circumstances. It is important to hold oneself accountable for the baseline projections. He stressed upon the need to involve all the stakeholders in the decision-making process. Dr Damle suggested that under conditions of uncertainty, it is useful to consider the concepts of bounded rationality and satisficing proposed by Herbert Simon, a Nobel laureate, as the investment decisions are made with incomplete information in an uncertain context.

Maintaining Independence in Decision Processes

Dr Damle also argued, citing an example, that the financing and investment decisions must be made independent of each other. A potential benefit arising from refinancing a domestic loan by a foreign currency borrowing could result in a significant loss if there is a discontinuous change in foreign exchange rates, i.e., a situation where the local currency starts depreciating significantly from an earlier trend of appreciation.

Mr Sunil Mathew stated that is not easy to be independent in a context where the CEO holds a sway over individuals through their performance reviews and compensation actions. Dr Damle suggested that the structure does tend to empower individuals even when the CEO has the final say or influence.

In his summary, Prof. Srikanth emphasised the role of technology in the investment decisions, particularly the use of simulation in evaluating different choices. He reemphasised the need for insightful use of financial metrics like NPV, IRR and Payback.

Session IV Choice of Strategy: Building a Profitable-Growth Business across Cycles

Panel Speakers:  Mr. Vinod Tahiliani, Dr Hasit Joshipura, Ms. Meenakshi Menon, and Dr A. V. Vedpuriswar and Prof. Anil K Sood (Moderator)

Referring to the morning sessions by Dr Sajjid and Mr Sabnavis, Prof Sood recollected the conversation about demand and supply constraints that the Indian and the global economy is experiencing. He also highlighted that the constraints vary by industry and keep shifting from demand to supply or vice versa over time. The emerging digital technologies are providing opportunities for growth and are posing a new set of challenges. Prof Sood requested the panel to share their experience about managing with constraints, i.e., that is the strategies that have helped grow the business even with constraints.

Ms Menon mentioned that we discuss the idea of growth in the context of society – not only from the shareholder’s perspective. Mr Tahiliani mentioned that the energy industry is faced with a dual challenge of delivering increasing amount of energy for helping improve the quality life on a sustainable basis without adversely impacting the environment. The strategy is all about providing means for growth and being a part of the solution that delivers sustainable growth. Dr Joshipura mentioned that growth for his business means the ability to grow through innovation and investing in development of technology with their partners.

The panel mentioned that the constraints on growth, at present, are arising from shorter business and technology cycles, unpredictable economic environment, changing consumer preferences, increasing rate of diffusion of technology and the fact that competition is not necessarily from the conventional players.  Dr Joshipura mentioned that the challenge for his business is to be a fast follower on innovation. Dr Ved mentioned that the question they face is how do we grow profitably? At present, they are more focused on building capability and looking at the impact of their choices on the society.

Placing Multiple Bets and Building Organisation Resilience

Dr Joshipura stressed that in an unpredictable environment, it is important to build organisation resilience and therefore the financial metrics (payback, IRR, etc.) have a limited role in making choices. It is also important to keep reinventing oneself. Mr Tahiliani mentioned, “while Oil & Gas is a long-cycle business, they still need to review their choices on a continuous basis and focus on the core idea of how one reduces the carbon footprint in every choice they make?”

In the current environment, the panel observed that there are big winners and losers. Both Mr Tahiliani and Dr Joshipura highlighted that we don’t necessarily know what is likely to succeed. They highlighted the value of placing multiple bets across a range of strategic options, and a willingness to accept that not all of them will succeed.

Organizations could also use scenario planning to understand the impact of economic cycles on the businesses and preparing a purpose statement as opposed to a five-year corporate plan. Mr Tahiliani highlighted that there is need for defining business in a much broader sense. Ms Menon talked about Coca Cola defining its business as the share of throat. It is about building business around one’s conviction.

Business as a Portfolio of Purposes with Consumer Value at the Core

In the digital world, organizations are increasingly becoming service organizations. To ensure growth, organizations need to think of all the possibilities as opposed to being limited to their traditional product-market definitions, e.g., the big banks are investing in Fintech, Netflix is one of biggest investors in content production and big automobile companies are investing in driverless cars. Given the degree of uncertainty about what is likely to fulfil the core need in future, it is important that business identifies its core purpose and builds its products, servicers, solutions and experiences around the core – light, heat and mobility in BP’s case. A large number of businesses are becoming B2C from being B2B. In this transition, information is becoming key to creating and delivering value and technology is an enabler for improving the quality of consumer experiences.

If an organisation does not identify the structural changes in the evolution of consumer needs and does not offer product, services, solutions and experiences that fulfil the changing needs, it is likely to experience growth constraints. A self-inflicted constraint, which is different from the constraint that is market-given or is market-wide.

Learning to Learn

Panel members also stressed on the need for flexibility, constant strategic reviews, and openness to making big strategic shifts, when needed. Dr Ved stressed the need for leadership team to become more open to receiving ideas from younger members of the team, making the organisation agile in true sense. He also highlighted the need for willingness to take risk. Dr Joshipura mentioned about the need for continuous learning, as the knowledge shelf-life is much shorter these days.

Growth Constraints and Organisation Imperatives

Mr Tahiliani highlighted that the energy industry experiences a significant amount of market-wide constraints on its growth as the enabling infrastructure is not available in many situations. Internal constraints often need a solution that may require a completely different approach to business. Shale gas revolution has taught big oil firms to become nimble-footed. One may create a separate unit or business, so that it can work independently of main business’ structural and cultural constraints.

Members highlighted the importance of organizational renewal, encouraging a culture of innovation and risk-taking, empowering employees at all levels, and leading a multi-generational workforce.

A higher organization challenge relates to developing capabilities in the broadest sense (e.g., large automobile companies entering the driverless vehicle businesses, and big banks investing in Fintech). Dr Ved mentioned that they look for young professionals who have the problem-solving capability rather specific skills. Dr Joshipura mentioned that it is important not to look for cultural clones.

Value Matters more than the Price

Responding to the question whether India is a price conscious market and therefore a company will experience growth constraints if the prices are not dropped. Speakers responded by saying that Indian consumer is value conscious and expects a strong price-value proposition, e.g., Nano did not succeed even after being the cheapest car. Price can help increase the penetration in certain circumstances, but cannot help sustain growth. Indian firms often look at volume to build scale and focus on earning absolute profits rather than the margin. Mr Tahiliani argued that there is a need, particularly in the energy sector, to let value determine the price and not distort market through cross subsidies. Segments that need energy at lower prices can be subsidised through direct transfers, wherever required.

In summary, Prof Sood mentioned that a business that grows across cycle focuses on the core value that it delivers to its consumers, the vehicles that deliver that value will undergo a change, technology that will helps create and deliver value will also undergo a change and therefore we need to have the ability and willingness to take risk – be able and willing to place multiple bets – bet finance and bet reputation. We need a culture, which is nimble, which allows us to let go if it does not work, enables us to work as a team where we can challenge each other without worrying about the level which these disagreements are coming from. There is also a need for investing in creating the required eco-system, helping people raise their capability and reach out to larger geographies for customers and talent.

Dr Damle mentioned that the firms that have invested in technology over decades naturally have a naturally much higher probability of success and thereby longevity, allowing them to determine prices in their markets. In businesses that are new or small, it is harder to place multiple bets that have low-probability of success, as the cost of failure has to be recovered through a small number of successful projects. Mr Tahiliani mentioned that the oil & gas business is about raising the probability of success by leveraging experiential insights as much as about leveraging technology.

Mr Manoj Niranjan asked if there is a need to rethink the discipline of strategy and is there a time dimension that one needs to consider while evaluating market investments. Mr Niranjan also asked about the impact of creating a new organisation for a new strategy, citing an example where Unilever created a different organisation for competing with a low-cost producer, on people policies and organisation culture. Responding to Mr. Niranjan’s question about the discipline of strategy, Dr Joshipura mentioned that we need to work with multiple scenarios and be fluid, review these scenarios at regular intervals to see if there is a need for change in strategy. Mr Tahiliani highlighted the need for evaluating a plan through a gated process, a project that goes into the plan is tested for many different sources of uncertainty and comes back for review at regular intervals. He also mentioned about the need to use options-based approach to strategy formulation. Ms. Menon mentioned about the fact that strategy formulation process has much wider participation at present than it had earlier.

Mr Kasera asked if we are growing at the rates faster than what is sustainable, as a large number of cities in India are crumbling as a result of fast-paced growth. Responding to Mr Kasera’s question, Mr Tahiliani mentioned that India has only a few centres of growth and therefore there is natural tendency to migrate to these centres. It is a problem that has multiple sources, and not all of them can be resolved at the same time. Dr Joshipura and Ms. Menon mentioned about the need for taking responsibility across the board and empowering agencies that can help us plan and enforce regulation.

Prof Pandey, citing an example from Reliance Industries, asked a question about how one defines the core for an organisation like Reliance who is in retail, refining and telecom to name a few. Dr Joshipura mentioned that the to invest in business across different sectors is to hedge against a possible situation where the current core is not likely to deliver the expected growth. It is also about building multiple platforms that can sustain growth across decades and across cycles.

Responding to Mr Sankara Narayan’s question about Tata Motors’ small car project (Nano), Mr Joshipura mentioned that it is important to see Nano as a solution to migrating users from two to four wheelers and see if another product could fulfil that need, if Nano does not. Prof Venugopal stressed that it is more appropriate to consider a value-based strategy rather than price-based strategy, as the price can never be kept constant. Price can’t be the basis of a strategy or a proposition to the consumer.

Mr Mathur mentioned that there is need for a multi-generational perspective on strategy. We saw a different world 30 years ago and the millennials are seeing a different world today. How does one bring the two perspectives together to form a strategy? Also, given the pace of change is strategy a management discussion or is it board or governance discussion. Strategic choices are also personal choices that an individual leader makes, particularly when it involves making a large bet. Responding to question about open innovation, the panel mentioned that we need to leverage all the possible sources in our eco-system. Mr Mudgal mentioned about the need for involvement of younger generation in thinking and writing about issues that organisations face today.

Session VI: Role of Leadership in Digital Age with Growth Constraints

Panel Speakers: Mr. Yogi Sriram, Mr. Yashwant Mahadik, Harbhajan Singh, Ms. Meenakshi Priyam, Prof. Manish Singhal and Prof. S Ramnarayan (Moderator)

Prof Ramnarayan mentioned that a leadership role, at one level, is about choice of strategy and processes, which involves balancing the opposites in a complex environment. At the next level, it is about culture and mindsets that drive the choice of strategy and processes. The culture helps define organisation purpose and enables people to commit themselves to realising the shared vision. At the deepest level, it is about the individual and we need to understand the individual in a leadership role. How does an individual face up to the challenges facing the organisation?

Mr. Yogi Sriram mentioned that he would focus on the role of leadership for making digitisation succeed in an environment where we have multiple constraints. He started with the question – what does the leader (a CEO or the Managing Director) expect out of digitisation, as it can combine a range of technologies and products? Mr. Sriram stressed that it is important to believe that digitisation will succeed and deliver results. He noted that leaders need to create a digital agenda.

Digital Agenda: Leveraging Technology for an enhanced Value Proposition

It is important that the leader demonstrates empathy and sensitivity, as digitisation can result in loss of jobs in certain situations. It is also important to know what the customer needs and suggest what digitisation can do for him or her beyond the regular impact that everyone else is promising, e.g., can digitisation help in reducing the crime rates in city over and above the efficiency that comes smart metering and smart traffic management solutions.

Digital Age Leader is an Invisible Leader

Digital age requires a leader not only to be creative oneself but also be open to accommodating creative ideas. A true leader in digital age has faith in and respect for bottom-up communication and multi-generation force. A digital leader cannot afford to be hierarchical, as digitisation involves a transformational change and therefore needs all hands on the wheel. Citing an example of a family-managed business, Mr Sriram mentioned that he was amazed with the way in which the leadership involved everyone in their organisation building effort.

Referring to the evolution of leadership theory, Mr Sriram argued that a digital leader (leader in digital age) is not charismatic, he or she is invisible and elicits the best of leadership behaviours across levels of responsibility. He or she is able to influence by communicating a compelling vision and is not insecure about his or her position.

Referring to W L Gore’s culture of collaboration, trust and commitment, Mr Sriram mentioned that there is a need to build a nebulous organisation – a structureless organisation that does not define roles.

Mr Sriram stressed that a successful leader in the digital world must be able to manage a fractal organisation, i.e., bringing a sense of entrepreneurship through small and empowered team. He stressed that it is inappropriate to use the phrase ‘digital disruption’, as digitisation is about creating opportunity to deliver value through unique customer experiences and with high degree of efficiency. The question really is – how do we create value and manage cost at the same time? It is not about cutting cost by bringing in digital technologies.

He further noted that in digital age, heuristic thinking is expected to be more important than algorithmic thinking.

Mr. Yashwant Mahadik, President Global HR, Lupin, mentioned that he would talk about the role of a leader in digital transformation.

Analogue to Digital Transformation: A Change of Mindset

Mr Mahadik noted that a large number of processes and policies currently are meant for the analogue world and probably serve no purpose in the digital world – the requirement of having a rear-view mirror in a driverless car is a legacy from the analogue world. An important digital leadership challenge, therefore, is to advocate the transition of analogue policies/processes into digital age.

Mr. Mahadik emphasised the need for senior leaders to understand the details involved in digitisation, as the failure to know the details creates risk for organisation and its digitisation success.  He noted that the benchmarks are constantly changing and exemplified the need to engage in fluid thinking (from other domains) to apply insights into organizational challenges.

Need for Foresight and Exponential Learning

Mr Mahadik emphasised the need for exponential learning, as digitalisation is fast paced and has multiple layers, which at various points in time could impact a range of different activities. Mr Mahadik mentioned about the transformation of Philips from a consumer electronics firm to a healthcare firm. An important digital leadership function therefore is radar management for the organization, and ask the question, do we have the capability to manage and predict what will happen in a few years from now?

Mr. Harbhajan Singh, Director at Honda Motorcycle & Scooter India Private Ltd., spoke about action-oriented learning, and posited life as a continuum of reflective thinking and practice.

Leadership is about having a ‘Sense of Occasion’

Mr Singh emphasised the role of context in guiding the choice of leadership style and strategy. He mentioned that Mr. Russi Mody, Dr J. J. Irani and Mr. B. Muthuraman were leaders of their time, and each led the transformation at Tata Steel in a different manner, suited to the context. Tata Steel was building greenfield projects when Mr Mody was leading, Mr Irani came in at a time when Tata Steel needed to enhance its cost competitiveness and Mr Muthuraman built Tata Steel through acquisition. All the three leaders had a sense of occasion and helped Tata Steel become a globally competitive producer.

Recognising Individuals and their Contributions, Sincerely and Always

Mr Singh mentioned that transformation involves cannibalisation – old technology is replaced by a new one. He also stressed that the pace at which an organisation changes is function of its own and the societal culture. Citing Honda’s example, he mentioned that Honda uses a process focused approach to ensure that the required change is implemented in all the countries where it operates. Consequently, the pace of change is naturally slower, as it involves detailed planning as well as scheduling. Mr Singh mentioned that his work at Honda has been a paradigm shift for him personally, as it involved being the head of Industrial Relations function from being the Vice President of Workers’ Union at Tata Steel. Mr Singh cited a couple of examples from his experience at Tata Steel and Honda to highlight the importance of relating to individuals and recognising the contributions they make to organisation and personal well-being. Citing an example from his regular visits to hospitals where the workers are admitted for treatment, he stressed upon the need for a leader to empathise and be sensitive to the conditions in which the team works.

He noted that a leader working with a multi-generational workforce needs to provide space to millennials, as they are much better at learning and leveraging technology for creating organisation value. Relearning is not easy for everyone. Hence the need to involve the entire workforce. It is important for a leader to identify the strategies that can help keep the product or service cost and quality competitive. A leader needs to create space for new technology and new perspectives.

Leading a Multi-generational Workforce: We have the Wisdom and they have the Wings

Mr. Singh noted that every new generation not only lives longer, but also learns and moves forward than the previous generation. Mr Singh noted that a leader must be able to identify the stage at which he or she needs to make space for another person or the next generation of leaders. We have the wisdom, but they have the wings.

Prof Ramnarayan, quoting John Kotter, mentioned that management as a field emerged as organisations became more complex. Leadership as a field has evolved primarily because of plurality, multiplicity of interests and the pace of change. Consequently, relationships and emotions play a more important role than rationality.

Mr Sriram noted that a leader needs to recognise that the timing matters. In present context, it can get tough to remain invested if the technology investment is too far ahead of its time. He reemphasised the need to be empathic while working in a situation that involves multiple stakeholders. A leader must also be able to identify where the talent pools for capabilities required for digital transformation are available, which may require combining acquisition with internal capability building.

Purposeful Work and Commitment to Learn

Mr Shah mentioned that healthcare is lagging in transforming itself through digitalisation. It is possible that we will have new competition from Google or Amazon, not existing known competitors. Retaining and leveraging capability, particularly that of the young workforce, is easier if we provide purposeful work. Recollecting Mr Singh’s comment that it is difficult to relearn, Mr. Shah mentioned that it is indeed difficult to reskill a workforce. Responding to Mr Damle’s comment about relationship between performance and leadership style, Mr Sriram stated that sublimating ego is very important in the digital world – be an invisible leader. In a transactional world, it is not hard to work with an individual’s vision, but in a transformation situation it is important to take people along as no one person knows what needs to be done.

Responding to Mr Jayakumar’s question about what should leaders of today stop doing, Mr Sriram mentioned that they should spend more time on their own learning and be willing to learn from the younger generation leaders that they work with. Mr Singh mentioned that what matters too is the honest attempt to learn. Referring to Mr Sriram statement about being an invisible leader, Mr Singh mentioned that visibility with conscious humility is indeed critical in the digital world.

Ms. Meenakshi Priyam mentioned that change today is fast paced and we have limited time to respond. Consequently, we require an active engagement and communication at all levels, be strongly human to inspire the change.  She noted that digital is all pervasive now and it is not a vertical anymore. If we want to create a digital experience for the customer, the employees must also have a digital experience. Successful leaders are good at managing paradoxes, e.g., providing low-cost, better-experience home stay as is the case with Airbnb. Alliance and technology is creating the possibility of managing the paradoxes.

Prof. Manish Singhal, Professor of Organisation Behaviour, XLRI, offered his perspective on leadership as comprising of making space and knowing oneself through reflective practice. Prof. Singhal emphasised the need to know others without assuming any prior knowledge about them. He also asked, “can we move from the state of becoming to the state of being over a period of time.” Life is not about filling a shopping cart.

Session VII: Agenda for Future Research

Panel Speakers:  Mr. Pawan Bindal, Mr. Yogi Sriram and Prof S Ramnarayan

Mr Bindal mentioned that it is important to invest and leverage available technology and build a relationship of trust that allows IASCC to remain relevant to a society for decades. Drawing from the various sessions, Mr. Bindal, identified the following research questions for IASCC to explore:

• What are ways to think and work on business strategy, so that an organisation remains committed to core principles, howsoever it defines them?
• Are small businesses getting taken out of the value chain? What role does technology have in helping small businesses grow? What choices do they have, which would enhance their chances of success? Do we a need knowledge sharing eco-system, which may involve building common centres of excellence?
• Referring to Dr Sajjid’ conversation around productivity, Mr Bindal suggested that we ask the question – Are productivity gains from digital absent or we not able to measure these gains or the gains being nullified by other factors? Are we able to realise the value of technology in personal, organisation and social life?
• How do we address the paradox of talent not being available despite a favourable demographic context? What capabilities does the young population need for enhancing its contribution to economic and social well-being? Is our education system capable of preparing our young for the opportunities and challenges that they are expected to face? What role does the corporate sector have in building the required capabilities? Do we need a new way to access the talent pool – start-ups, industry-academic partnership, internships, etc.?
• What does the leadership paradigm of “Planet to People to Profit mean” in operational terms?
• What does leadership mean when expressed as “Serve to Lead” perspective?
• Referring to GSK’s example of leveraging technology for professional connect, Mr Bindal suggested that we ask the question – How do we leverage technology to listen to different stakeholders? Are the organisations that are more sensitive to their stakeholders more effective in creating shareholder value in the long-run?
• Do we have right financing mechanisms in place to finance growth, particularly for small and medium sized firms? What is the role of FinTech in delivery of credit to consumer and small-medium businesses?
• What is the impact of data privacy laws on credit evaluation?

Relevance and Solution Focus

Mr. Sriram stressed that we need more statistics or information-based research rather than opinion-based research. Given the new economic currency is trust, it will be interesting to do a survey on trustworthiness of leadership. He identified the role and relevance of blockchain technology in project management and manufacturing as one area of research. He also suggested that IASCC should look at out of the box ideas for research, such as leadership lessons from Thailand cave rescue.

Prof. Ramnarayan emphasised the need for partnerships and creating learning communities that are excited about the subject of research, as being engaged with the question is a critical condition for enquiry to be valuable. He also suggested that we make an effort to document stories from individual experiences, capturing the bright-spot stories.

Mr Sriram also emphasised the need for research that is industry focused so that our teaching is also backed by our research as we see with some of the professors from leading schools in the US.

Mr Sankara Narayanan suggested that our research be context-relevant, particularly focusing on questions that are asked more often (e.g., the impact of GST on growth during the next few years). Mr Mudgal suggested that we also consider the applicability of practices and ideas across domains. Prof. Venugopal mentioned that we must build credibility where the industry seeks out IASCC and is willing to partner with the Institute to work on projects that are of mutual value.

Mr Sriram suggested that we explore the possibility of doing solution-focused research, in addition to the hypothesis-testing and insight-seeking projects. At this stage of India’s evolution, it is important that our research leads to hope, solutions and success.

Dr Jayakumar suggested that we work with educational institutes in a given area to identify the potential skills that are required, given the nature of economic activity that is expected during the next few years. Mr Azfar Hussain suggested that we could research to identify the nature of generational transitions that India is experiencing to determine if the classification discovered elsewhere (e.g., Gen Y or Z) are applicable at all or are there completely different behaviour discontinuities that we are experiencing in urban and rural India. He also suggested that we explore the possibility of working on research questions that some of the organisations or professional bodies are interested in but don’t have the required capability to undertake the required research.

Ms. Jyotsna mentioned that it is important to understand if our present skilling programmes are helping build the capability that we need and if our workforce is future ready? Are we investing wisely in skill development programmes and is the CSR spend being directed to projects of value to society?

Collaborations that Complement Capabilities

Mr Sriram suggested that we partner with Institutes that have a capability that complements our capability, particularly around the research methodology which will allow us to build methodological specialisation. For example, TISS is good at qualitative research and we can complement them by offering quantitative research capability. Mr Azfar stressed that we should not foreclose a research question by opting for a specific methodology.

Mr Pinge stressed that we should consider picking up out-of-box research ideas where we are able to differentiate from another institute. He suggested that our research should have commercial value. He also suggested that we should prepare a list of activities/projects that could be shared across with the Conclave community, which will allow us to increase the level of involvement as well as the contribution from individual members.

Mr Kasera suggested that we should have a small group that studies the impact of business on environment and can help make better choices in this context, which involves multiple trade-offs.

Dr Nageswara Rao suggested that we keep in mind the extent to which we allow the Agenda to be governed by individual organisations. He further stressed that an education institution should focus on commercial impact of its effort as well as the larger purpose of developing human capital in the society. Dr Rao mentioned that we still have a gap between what is expected by industry and what is being delivered by educational institutions. At the same time, there is a gap between what is expected by young professionals versus what is being offered by large organisations, as many young professionals come back to their alma mater after a few years saying that they are not happy and would like to register for a PhD and work in an academic institution.

Prof Pandey mentioned that the academic institutions are constrained in writing cases, as not many organisations are keen to share information. He also stressed that the research projects should be planned in a way that we balance the short-term projects (3-6 months duration) with medium to long-term projects (PhD research).

Mr Sriram mentioned that we have an opportunity and need for experimental research in India, as not much is being done in the international context at present.

Prof Venugopal suggested that we can afford to be a rebel and try developing India specific models, as we do have a lot of native knowledge that exists in India.

Prof. Sood made an explicit promise that our research will be context specific, as that is part of our vision and our commitment to our society.  We will engage with the participating leaders and other professionals and get inputs about specific projects. Prof. Sood mentioned that IASCC would not like to work on consulting projects. Our research will be industry relevant, for sure.

Prof. Sood said that the institute will review the learnings from the Conclave and outline the research that IASCC will conduct. He promised that we will definitely have our next Conclave during 2019. We will also organise shorter duration roundtables on issues, arising from our discussions at the Conclave or from our later conversations.

Prof. Venugopal mentioned that XLRI would continue to collaborate with IASCC and build on the collaboration that has started with the Conclave.

The Conclave ended with a vote of thanks you speakers, participating leaders, IASCC team and its partners for their effort in making it a great success.

The above summary has been prepared by Prof Anil K Sood and Dr Anujayesh Krishna, based on the proceedings at the Conclave.