Attaining cost effectiveness and economies of scale are no longer the underlying principles of measuring growth
Maintaining business stability and ethics is another important factor that will define t he n ext g eneration e nterprise
The crafting and implementation of business strategy will be greatly influenced by the DNA of next generation enterprises. Besides attaining cost effectiveness and economies of scale, factors such as technology, virtual connections, resource efficiency and financial inclusion will take precedence
The next orbit of business implies of a business environment influenced by globalized uncertainty, continuous transformation, and growing importance of institutional forces. This emerging landscape is fundamentally changing the way we do business and is redefining the means through which enterprises can achieve competitive advantage. In order to do business in the ‘next orbit’, companies will have to assume the characteristics of next generation global enterprises. And presumably enough, these next generation enterprises will have to evolve out of existing organizations. Where on one hand, the unprecedented growth opportunities are forcing companies to adopt new systems and processes to operate business, external social and cultural factors are also laying the seeds for organizations of tomorrow. With the emerging business landscape, the means by which organizations achieved competitive advantage over their peers have also been redefined. Attaining cost effectiveness and economies of scale are no longer the underlying principles of measuring growth. Other factors - such as adopting latest technology, being virtually connected, responsibility towards the environment and financial inclusion - are fast becoming important parameters for corporate growth, acceptance and success. Consideration of these factors will define the virtues by which future organizations will be recognized and business strategies will be devised.
Growing environmental concerns have led to the ‘Resource Efficiency Agenda’ coming into boardrooms. The Government too has directed its focus towards climate change and its implications on business and vice versa, and is not giving easy clearance to projects. Depletion of land resources, conversion of forest areas into commercial plots and dilution of water bodies with hazardous chemicals have enticed environmental activists to raise their voice against corporations.
The consumer too is aware of rising environmental risks today and is increasingly showing preference for environmentally responsible companies while making purchase decisions. With an increasingly assertive environment minster, various power, steel, real estate and infrastructure projects have been stalled over the last three-four years for not being able to address the environmental concerns. Vedanta Alumina’s $1.7-billion (approx Rs. 7,500 crore) plan to mine bauxite in the Niyamgiri Hills of Orissa has been at loggerheads with the union government ever since it was denied environmental clearance. For its Rs. 54,000 crore integrated steel project in Orissa, Pohang Steel Company (Posco) got the Stage II forest clearance in January 2010, two years after it got clearance for Stage I forest clearance. Posco had to deposit Rs.105 crore to the state for compensatory afforestation. Recently, the Government-appointed Ms Meena Gupta panel had recommended that the final forest and environment clearances to Posco be revoked forthwith. In Andhra Pradesh too, state-owned Power Generation Corporation’s proposal to set up a thermal project in backward Srikakulam district has been shelved due to non-clearance from the Environment Ministry. Considering the regulatory obstacles, organizations will have to henceforth devise business strategies taking environmental sustainability into account.
The IT revolution initiated in the mid 90s and its evolution into an Internet based mobile world of hyper-communication and hyper-connectivity too has become an important characteristic of the next generation enterprise. Communication and collaboration through integrated web and mobile networks have been increased to a very great extent. We can act and react to the information flow that is addressed to us in real-time now. The web-mobile technology systems have erased the frontiers between work and leisure and made the business environment completely virtually connected. The working population is today virtually connected with their customers, partners, vendors and clients through social media such as LinkedIn both in domestic as well as international markets. Today, UK and US-based companies are outsourcing work to Indian nationals by setting up virtual offices with authorized access through passcodes. This implies that organizations need to be more technologically sound than what they were before and leverage these technologies to enhance their visibility in globalized markets.
Maintaining business stability and ethics is another important factor that will define the next generation enterprise. The recent credit crisis has spawned a number of important issues on the credibility and ethics of various large multinationals. In the next orbit of business, there will be lesser room for unfair practices as investors will henceforth demand greater disclosure of financial details and attached risks before investing in the instrument or the organization. With SEBI already tightening its clutches against unfair practices, Indian companies will have to work towards increasing meritocracy in business decisions. There is also an increased focus on tangible values for customers, stakeholders and society and to reduce activities that lead to economic bubbles. This, in turn, has translated into increased demand for producing more reflective managers leading to a more ethical business conduct on the global scene.
The crafting and implementation of business strategy will be greatly influenced by the DNA of next generation enterprises. While competition will be integral for the growth of the organization, companies will also have to collaborate with each other for the growth of the ecosystem and the nation. Decision-making will no longer be restricted to boardrooms but will engage all stakeholders including employees, business partners and customers in devising strategies.