Organisations need to align and contextualise the way they have been doing their business according to changing business scenarios
The new business order is becoming fiercely competitive; those who have lost out want to make a comeback and hence, you need to compete
In the run up to the 42nd IFTDO World Conference on April 23-26, 2013, Dr Pritam Singh – DG, IMI and B.P. Rao – CMD, BHEL, talk to People Matters about the need for organisations to be cutting edge by building capability to remain competitive in the new business order.
“Never in human history has the change been on such a scale,” says Dr Pritam Singh, Director General, International Management Institute (IMI). Perchance, he couldn’t be more apt. The pace at which change is taking place across organisations is phenomenal and going forward, it is only going to increase. The business landscape is increasingly changing, with industry models shaken, revenue streams turning volatile and competition becoming hybrid. Business models that have existed for years are now under attack – thanks to the changing consumer behaviour and technology, forcing them to either adapt to the trend or wither away into obscurity. The economic downturn and escalating pressure on corporate profitability have combined to focus the spotlight firmly on what is being termed as the new business order. The question then is – are organisations aware of this change and if yes, what are they doing to leverage the new business order?
The near meltdown of the financial system and the ensuing great recession has been, and will remain, the defining issue for organisations. Over the past couple of years, there has been a dramatic acceleration in the shifting balance of power between the developed West and the emerging East. Agreeing with the shifting balance of power and more so in the context of manufacturing, B.P. Rao, Chairman and Managing Director, Bharat Heavy Electricals Limited, says, “The new business order has emerged in the last four to five years. The global manufacturing base has moved towards Asian countries like China and India and manufacturing is totally becoming uncompetitive in European countries as well as the US.” Now that the worst seems to be behind us, it’s tempting to feel a sense of deep relief — and a strong desire to return to the comfort of business as usual. But that is simply not an option. Rao makes a strong point, “The new business order is becoming fiercely competitive; those who have lost out want to make a comeback and hence, you need to compete.” Dr Singh advocates the need for organisations to align and contextualise the way they have been doing their businesses according to changing business scenarios. “If we don’t change, then perhaps the relevance of the way we do the business will be questioned and that would put us in further trouble,” he says.
In an era of risk and instability, globalisation, new technologies and greater transparency have combined to pose tremendous challenges for strategy making. This is so because the traditional approach holds true in a relatively stable and predictable world. So, how are organisations gearing up to the new business challenges? The answer to these and many more such questions seem to be inextricably linked to how organisations transform themselves into cutting edge firms. This requires them to focus not only on capacity building, but lay equal if not more emphasis on capability building.
Cutting edge strategies and technologies are well heard of; what is rarely talked about in the mainstream is cutting edge organisations. Both Dr Singh and Rao feel that if organisations are to flourish in the new business order, they need to transform themselves into cutting edge organisations. And here too, the duo makes it amply clear that the real differentiator would be human resources.
“These companies will have manpower that contributes in the most effective manner in terms of value. It is essential that this manpower has all the cutting edge skills,” says Rao. “When you talk of such an organisation, it is not merely in terms of technological sophistication, but it also encompasses mindset sophistication in terms of involving and engaging people and embracing inclusive growth,” adds Dr Singh.
Can organisations transform themselves to cutting edge institutions by focusing on capacity building? Can capacity building alone help organisations challenge the limits to growth and find a new trajectory? Or is there more to it? While it is important to emphasise on capacity as well as capability building, Dr Singh says he feels that the two terminologies are often not understood. While capacity building has more to do with the hardcore business aspect, capability building has a lot more to do with the softer aspects – mindset and people variables. “The only competitive edge for a cutting edge organisation is capability building,” says Dr Singh.
Concurring with Dr Singh, BHEL’s Rao says, “Cost effectiveness alone will not help. It has to come up with capability building.” Cost leadership or quality leadership can be imitated. Even superior technology is available to all organisations and innovation can be imitated in a year or two.
A successful organisation is the one does not only require capabilities to meet today’s business needs, but must also be able to identify which capabilities need to change in a rapid, cost-effective and risk-managed approach to address new market realities. Investing in “developmental skills for the future” as Rao terms it, is the key that will help organisations develop products and solutions, which are cost effective, technologically advanced and in tune with new business realities.
Organisations need to be aware of these trends and must be able to anticipate the competencies and resources needed to adapt their companies to these changing times. However, organisations that are not cognizant of the changing business dynamics will become obsolete at a rate like never before. Dr Singh puts it aptly, “Organisations that fail to live up to the new emerging challenges put themselves at risk of obsolescence from market leadership to market demise.” In an interdependent and competitive global economy, organisations must endeavour to position themselves as cutting edge organisations that rely not merely on capacity building, but capability building and are keen to take advantage of the new business order.