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Press Releases

Startups also need to free themselves of dogma: Aditya Birla Group chief strategist

26 Apr 2022

Press release – Regional Management Conclave

Like the legacy companies, Indian startups are also stuck in the old dogma and their refusal to see the future is one of the reasons the listed startups are doing badly on stockmarkets, according to Mr D Shivakumar, Group Executive President, Aditya Birla Management Corporation Limited. “They need to transform,” he says.

Mr Shivakumar was speaking at the 7th Regional Management Conclave jointly organized by All India Management Association and the local management associations of the eastern states of India.

Mr Shivakumar said that the increasing pace of change is shortening the longevity of companies and the likely average age of companies is set to decline to about 15 years from about 20 years now. He said that in the past 25 years, he has not seen a big company beat a small company, instead he has seen the fast companies beat the slow companies. “Faster companies become bigger companies but bigger companies may not become fast companies,” he said. The biggest opportunity for small and new companies is to go digital, even conduct old businesses the digital way, as digital is the shortest route to the customer, he said.

Mr Shivakumar said that during uncertainty budgeting has to be based on realism and not optimism, as there can be a big change between the previous period and the next. However, the cost structures must be built on pessimistic scenarios, he emphasized. He said that long-term transformation needs to be based on 3Ls: longevity, loyalty and learning. According to Mr Shivakumar, company longevity and employee loyalty are no longer a given and the only thing that guarantees future success is learning by the leader and the team.

Mr Shivakumar said that trends can be validated by checking whether they impact the society, the family, and the individual. If a trend involves all three, then a company should expect that trend to arrive on its doorstep soon, he said. “The truth is not in the boardroom but out there in the market,” he said, adding that business leaders should get more people to feel the heat of the marketplace and they themselves should travel to talk to customers. “If customers address you in the past tense, you are in trouble,” he said.

The shortened lifespan of companies is putting pressure on managers to plan differently for a 30-35 year career, Mr Shivakumar said. One has to choose whether to join a legacy company which may last about 50 years or a startup that may morph, get acquired, or collapse within a few years. “Joining a startup is like riding a wave,” he said.

Mr C K Ranganathan, President, All India Management Association &
Chairman & Managing Director, CavinKare Pvt Ltd highlighted the uncertainty caused by cartelization in international markets. He said that earlier, the container and shipping cartels used to cause only short-term pain but now the costs are not coming down. Also, he said, earlier only crude oil producers used to cartelize globally, but now all commodity suppliers are forming cartels.

Mr Ranganathan emphasized the need for shortening the budget horizons in times of uncertainty while forming immutable organization objectives and values that transcend the current situation. He also stressed the need for investing in data and analytics along with decentralization of decision making authority during high uncertainty and volatility.

Mr Chanakya Chaudhary, President, Jamshedpur Management Association & Vice President, Corporate Services, Tata Steel said that the pre-covid way of living and working seems like a dream now. “Change has accelerated and it is thrust on us. There is longer a choice,” he said.

Ms Rekha Sethi, Director General, AIMA anchored the online session, which attracted more than 500 delegates.

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