Businesses don’t have a choice to continue to work with ‘square pegs in round holes’– Pankaj Vasani
Exito caught up with seasoned business & finance executivePankaj Vasanifor an exclusive virtual interview about the post COVID-19 trends in which the business landscape and ecosystem will change – esp. in the medium to longer term, which needs to be focussed and leveraged upon to help manoeuvre and champion the new world order.
Exito: 2020 has been a tough year across the globe. CXOs need to change their ways of working. Your take on it?
PV: The time scale and veracious realm of COVID-19’s impact on businesses is still a conundrum. And therefore, the consequences for the economy or industries or enterprises are still unclear. As per the World Trade Organisation, global trade is expected to fall by an unusual 13 to 32 per cent this year. We are witnessing a more perpetual and formative metamorphosis to the way we run the enterprises.
However, while the situation is fluid and ambiguous, CXOs have to be decisive when change provides an opportunity for shaping the organisation’s potential strategic direction. Unfortunately; there are no precedents, right or off the cuff answers, or standard operating procedures that can be followed. CXOs have to have a sense of urgency and hunger to intelligently develop a new vision, revamp their operations (and business objectives) consistently and augment to map the next phase of the ‘contemporary-normal’. If countered with decisive steps, the challenges posed by the novel pandemic are not insurmountable.
Exito: Does this mean that enterprises need to reposition their offering to keep the consumer engaged? If yes, how?
PV: Consumer behaviour and sentiments are one of the important elements to understand to be able to forecast the demand trend and planning cycles to stay ahead of the disruptive curve. It is paramount to understand their needs (not necessarily their wants) to be able to focus on how to change the offering. In the recent past, many studies indicate that consumers are responding to the crisis in a variety of ways. It is likely for the consumer’s purchasing habits (focus on health, fitness, hygiene, quality, reliability, safety, personal grooming, online shopping, vocal for local, remote education/learning, mindful about spending on non-essential, connecting with friends/family digitally, at-home entertainment, embracing DIY trends, digital payments, environment, working from home, etc.) to change permanently during the lockdowns.
Brands need to reposition their products and services to address the present-day gordian knot of changing consumer preferences intriguingly. Enterprises should continue to engage and stay connected with customers (and prospects) by investing appropriately in sales, marketing, advertising, and other campaigns. If resources are a challenge, it needs to evaluate low-cost channels of communication, accordingly.
Exito: What do you think about the localisation of supply chains?
PV: There was heretofore an inclination toward producing more within a nation’s borders. Now, the crisis has exposed a lot of challenges and vulnerability encompassing global supply chains causing domino-effect shortages. It is expected that the manufacturing paradigm will re-shift to a fully localised supply chain, as feasible. It is a necessity as well as an opportunity. Certainly, it requires significant change at all levels.
A local supply will guarantee reduced lead time, uncertainty and cash trap & augmented control and cost; and hence, is inextricably linked with making the manufacturers more buoyant. Emphasis is also supplied to it by the transnational political tension, advancement in technology (like 3-D printers etc.) and an overall global stagnation which will, odds-on, engender larger isolationism and a risk aversion approach by the manufacturers. This is even though many a time, globalised supply chains could at times be cheaper and help keep mediocrity at bay. However, greater localisation does not mean an absolute end of the global value chains. Again, supply chain resilience is equally important. Bouncebackable potential must be developed to respond to the change. If opportunity doesn’t knock, build a door, said Milton Berle.
Exito: In the current context digitalisation needs rethinking– in word and spirit. Do you agree?
PV: As enterprises adjust and respond, it is patently clear that Covid-19 has brought home the importance of digitalisation across industries and forced organisations to rethink and pioneer. It has shown us the potential of a digitally transformed world. Never before has the digital agenda been so vital – which has to become a major part of the organisation’s business models, strategic plans and efforts to drive efficiencies. Depending on where a company is in its life cycle, understanding where digitalisation is best clouted (and where it isn’t) and implementing (or adjusting) it on a war footing is paramount.
Through powerful alchemy of ingenuity with digitalisation, successful enterprises need to drive business transformation across the entire value chain. It requires the leadership team to be supremely harmonized to the digital landscape with technologies like AI, robotics, machine learning and blockchain, to selectively modernize technology capabilities and enable to leverage that understanding to pilot efforts to revamp the business, recuperate productivity and run the strategy. Even post the pandemic, digitalisation is here to stay. It will underpin everything and that is where significant opportunities (or threats) and investments will occur. Any enterprise cannot afford to take a ‘wait-and-watch’ approach. If it does, it may run the risk of being put at a deadpan – like it happened with Kodak, Nokia, BlackBerry, etc. in the past.
Exito: This is a two part question – is this a good time for operational improvement? Also, how has the role of financial monitoring changed?
PV: A recent McKinsey report stated that South Korea’s manufacturing industries rate as sixteen times as productive (measured in terms of the ratio between GVA and number of employees) as India’s, and China’s are nearly four times as productive. Quite a few enterprises are capable of spindling their operations to counter the needs which have transpired – to clinch productivity, efficiencies and competitive dominance. This requires a thorough, open and systematic analysis of all areas, without any exception, to identify every plausible avenue of improvement. This will help identify the kinds of levers one can pull and how much. Pulling all the levers at once or too many changes concurrently may break the business.
Financial monitoring and reporting (error-free, comprehensible, & well-timed) are more important than ever. Output always equals input. The numbers may not give the integral story, but they will aid in appreciating the financial dynamics. It is paramount to implement an easy-to-read format or dashboard of developments that can help keep all stakeholders to know where each “ball” is, where it’s going, and where it needs to be. It will help see the patterns to react quickly and effectively. Operating KPIs/metrics also need to be continually reviewed to ensure that only the appropriate things are being measured and tracked.
Mr. Vasani is a business leader and finance expert with over two decades of experience. He has held many senior executive roles, served as a board and audit committee member. Over the years, he has donned various hats – Group CFO, Finance Head, CEO, Tax/Legal/Compliance Head and member of Board of Directors. He has held leadership roles with Vodafone, Publicis and Coca-Cola.