Learning to manage volatility would be the key for India to turn the current economic crisis into an opportunity, said Prof CK Prahalad, Paul and Ruth McCracken Distinguished University Professor of Strategy, University of Michigan. Prof. Prahalad, He is a leading global thought leader today was speaking at the Opening Session of The National Conference and Annual Session of Confederation of Indian Industry (CII),underway in New Delhi.
Prof Prahalad said that In this new global economic order, there is a unique opportunity for Indian companies which would have a level playing field for the first time. No company had experience of this kind of volatility and there was therefore an opportunity for new leaders to emerge from India. For this to happen, there had to be a paradigm shift in the way business had been managed.
He went on to say that India had to view its large population as an opportunity and convert it into micro-consumers and build a supporting infrastructure for it. “We must bring a Tata Nano into all our businesses. Bring in a creative approach that would enable us to create products at 1/50th the cost at which they would be produced in the US. We must fundamentally change the value equation anywhere in the world. In the West, the focus is on consuming less, in India we have to move beyond competitive strategy. The challenge is to get more and better products for more people with fewer resources. Transformation was required and Innovation was critical” mentioned Prof. Prahlad.
India can only have growth if it is both inclusive and sustainable. India can eradicate poverty through profitability and not through subsidy. India has to face the challenge of providing water to over 1 billion people. However, there is a need to keep the new dynamics of the global economy and global markets in mind. Today, 60% of the new middle class is to be found in Asia, said Prof. Prahalad.
There was a need for clear direction, agility and resilience in industry. India @75 should become the long term strategic intent of every company. This cannot happen in isolation. NGOs, PSUs and civil society must be involved in this endeavour. Equally there was urgency for the complete eradication of corruption which costs the country $23 trillion in purchasing power and growth. When it came to corporate governance, however, Prof Prahalad cautioned against regulatory intervention. All that was required is personal integrity and conduct, Prof. Prahalad added.
Looking back on the year gone by, Mr K V Kamath, President, Confederation of Indian Industry called it a challenging year with global upheaval and Indian industry caught in a vortex of issues. There was a meltdown in the financial markets, and a collapse of the commodity markets. He traced the euphoric mood of Indian industry in July 2008 which was followed by despondency in November 2008. By March 2009, the mood had improved and it is now widely believed that the mood will become even more positive in the fourth quarter. According to an informal poll, 99% of CEOs believe that the performance of their companies will be better this quarter compared to the previous one. The Indian economy is firmly on the road to recovery and will end up having a higher growth in the coming year, the CII President said.
Venu Srinivasan, the President Designate of CII said it was time to take stock about “where we are” and “where we want to be”. He believed that if we wish to have a stable society we need to focus on getting our people out of poverty with some sense of urgency. Mr Srinivasan said that the Indian economy will revive based on the domestic markets. There was a need for consumer confidence to be restored. Aspirations must be greater than resources. With personal leadership and integrity, we can revive our economy.
