Anil Nair is Managing Director and CEO at AGC Networks Ltd. with over 30 years of experience in global strategy, services, operations, projects, sales and marketing. In his career, he has held executive leadership positions for over 20 years with the Tata Group. His industry exposure includes Enterprise Communication, Consulting, Business Automation, IT Solution Integration and Services.
In 2015, he has received the Udyog Rattan Award from The Institute of Economic Studies and the Indian Institution of Industrial Engineers Performance Excellence Award.
The growth challenge
The biggest challenge of companies and business leaders of our time is creating and sustaining profitable growth. Markets, and that includes existing and potential investors, customers, partners and employees, embrace growth companies and are skeptical when growth slows down. Growth is proof of life, as it were. It is of course dependent on external factors too. Strong governments with cogent developmental programs and healthy budgets spur all-round growth. Inflation levels and currency exchange rates directly affect both sentiment and business, as do infrastructure, connectivity, energy availability, law and order and the ambient business culture.
Delivering growth without quality isn’t sustainable. The quality calculator in our minds looks at whether the product or service we purchased matches up to the price we paid. And while each of us may view the same transaction differently and arrive at positive or negative outcomes of varying degree, there is still a majoritarian view if not an universal opinion relating to the quality of the product and accompanying experience. After all, no one would like to repeat a bad experience unless they’re die hard masochists.
There are many who have created growth but found it was unsustainable because it wasn’t profitable. Anyone, I repeat anyone, can sell below cost and create growth, unless the compromise with quality far outweighs the immediate economic gain. Famous names in the e-commerce space continue to defy economic gravity by taking pride in selling goods at the lowest price levels, way below costs, as can be surmised from the losses they blatantly and unabashedly pile up. They are exceptions, powered by astronomical valuations based on the current impact they are making. The belief that the customers thus captured will stay captive when the business model transitions to selling above costs could be illusory. Also, growth without profits inevitably compromises quality and that’s a sure path to stagnation.
Knowing your niche
Every leader has to evaluate the resource he or she commands and the markets they have to serve. The highest levels of return on resource happen when target markets are sharply defined and the team’s individual and collective skill inventory match the skill demands of the target markets they seek to serve. The role of the leader is critical. Lack of market knowledge is obvious when the plan envisages reaching out to poorly defined customer sets or too many of them. Equally, leaders who attempt to tackle all the opportunity there is and resolve every problem on hand in just one quarter display naiveté and lack of prioritization. And that always translates as diminished revenues, low productivity, much slack and more fatigue than fervor. In large companies serving global clients across geographies, the word ‘niche’ takes on a wider denomination and the adverse consequences of fuzziness are far greater.
Leaders must know where the real potential in the market lies. And the opportunities to pursue that will translate to profitable revenues within an optimal period of time. The implications of seeing market opportunity in general rather than specific terms is the consumption of more resources than required for results to happen. Fat plans increase costs and make you uncompetitive. Fat plans increase investment, increase activity, increase internal meetings, increase travel, increase debate, increase gossip and blunt the organizational edge. Fat plans decrease synergies, decrease motivation levels, and diminish outcomes.
As an example, let’s take advertising and sales promotion in a B2B company. Simple analysis will reveal the number of customers required to be pursued and won in a particular quarter to meet targeted revenues. That would help determine the funnel required in terms of prospective customers. If the leader doesn’t know that specific number and instead aims at reaching a much much larger customer set instead, he would be thin on resources and that would certainly affect outcomes. Again, specificity in knowing the target markets and prospects to reach would help him preclude extravagant advertising spends in mainline print and electronic media. He could instead craft a specific email and social media outreach which will reach the right audience with precision at an economic cost. He would also deploy less sales resources, so sales productivity would be high and fatigue low.
The silo effect
Most companies are organized as teams with team members doing similar tasks. Various teams operating in concert constitute the value chain of the entity, delivering returns to customers. The silo effect manifests when teams don’t perform in concert and activities fall through the cracks, leading to customer complaints and unacceptable levels of client dissatisfaction. In such a scenario, teams that should be collaborating become antagonistic. The silo effect is in play when each team demands more resources than are required to solve problems. That need patient discussions in a problem solving mode instead. The silo effect is in play when wasteful expenses are incurred for negligence. And when the blame game and excuses cloud the work environment. The only antidote is to staff correctly so teams are taut and there is no slack. Collaboration on the ground has to be rewarded more than pinning stars on gun slinging lone rangers hunting for bounty. Because fat plans are a consequence of the silo effect.
No company can afford to operate with inflated cost structures in a commoditized, hyper-competitive world. Leaders must be able to differentiate between good costs that help the cause and profligacy. In a world where rapid market inflections are the order of the day, frugal companies have the edge. They have more time to adapt. And frugality is about doing much more with less, which tests our ability to innovate and think differently.
In sum, the days of lean planning are upon us. The days of 100 page business plans that fail to catch the reader’s attention, where finding critical strategic operating indices is akin to finding a needle in a haystack, are over. The mantra now is: think lean, plan lean and create disproportionate outcomes. Fast !!