Speaking at the session on ‘Building Resilient Business Models’ during the 1st CII ‘Being Future Ready’ Business Summit 2022, Prof Krishna G Palepu, Ross Graham Walker Professor of Business Administration and Senior Advisor to the President of Harvard University, Harvard Business School stated that “Resilience is all about ease of dealing with change”. He further added that, “it is the ability to continuously anticipate and adjust to the trends before the need for change becomes inevitable & painfully obvious, and resilience requires us to dynamically reinvent business models & strategies as the world is changing around”.
While outlining the key sources of changes in the current times, Prof Palepu included Technology, Entrepreneurship, Climate Change, Changing expectations on the role of business in society, in addition to the pandemic and globalization. ‘Technology for the last 3-4 decades has been accelerating and affecting every single aspect of our lives and have enabled us to continue to live through the pandemic, he added.
Prof Palepu articulated the important kinds of resilience, namely Strategic Resilience - which involves dealing with disruptive changes and unfamiliar sources of competition; Operational Resilience - which is to sense and respond capability as day-to-day risks emerge such as supply chain disruptions; and Personal Resilience - which is the capacity to respond to change, that is, having a mindset of problem solving rather than assigning blame.
Stressing upon the importance of change and the ability to change, Prof Palepu mentioned that it is imperative to have a “north star” or a purpose as the source of stability or guiding light amidst the continuous change. He outlined a flow wherein “Having an exciting purpose will lead to developing a business model designed to achieve the purpose, which in turn attracts talented employees and motivates then, thereby leading to development of innovative products and services, that results in satisfied and loyal customers, further leading to sustainable financial performance, finally leading to happy shareholders’, he further elaborated. Prof Palepu stressed that the “exciting purpose” has to be the source of stability in this world of change.
Reflecting on the pandemic, Prof Palepu commented that while the last two years have created massive opportunities for certain companies like Amazon and certain pharma majors, which have benefitted from the facets of globalization, it has also led to a world which is rediscovering the importance of Nation states. Since this global situation had to be fought at the nation state level, it has led to a greater interest in local regional economic development- which is now taking a centre stage.
Dr Naushad Forbes, Past President, CII & Co-Chairman, Forbes Marshall reflected that the last two years have been extraordinary, where in the world dealt with series of events including the once-in-a-century health crisis, that affected every individual and every government, followed by the recent conflict in Russia-Ukraine, further escalating the global supply chain disruptions. He noted that these events have greatly added to the uncertainty, which is one of the most challenging issues to deal with for businesses, thus stressing on the need for businesses to remain resilient in these trying times.
On the global supply chain issues, Dr Forbes sought the opinion of Prof Palepu whether greater vertical integration and onshoring is important today. Prof Palepu opined that we don’t need to be vertically integrated, however, we need to manage systems well. He articulated that the auto manufacturing industry has done this well and supply chains could be closer to the business geographically but not exactly within the company. It would be an ecosystem that the business will invest in and not only harvest from. “The idea that you can control everything is an old idea which is not possible and will not happen” he stated.
12 May 2022