Managing Enterprises in Adverse Times

After a decade of growth, the world has just witnessed two consecutive years
of decline in per capita income. The downturn has wiped out more than three
million jobs in the past few years. In the US, over 450 publicly-traded
companies totaling $650 billion in assets have filed for bankruptcy. Low
consumer spending, depressed demand, worsening fiscal and external debt problems
in several countries, rising geopolitical tensions, increasing incidence of
disease… these are difficult times indeed!

cannot get preoccupied with the immediate in times of adversity.
That can kill you"

M Nilekani

In this context, what can corporations do to ensure growth?
During adverse times, it’s important to revamp your strategic planning
processes. Your strategy is derived out of analyzing the industry structure,
your company’s relative position within the industry, and other external and
internal pressures growth the company is facing. Your strategy defines how you
will differentiate in order to remain competitive. Business leaders cannot talk
enough about strategic planning. However, in times of adversity, senior
management is often so preoccupied with immediate issues that they lose sight of
their ultimate objectives–they tend to exhibit ‘strategic myopia’.

In the words of Roman philosopher Seneca–"Our plans miscarry because
they have no aim. When a man does not know what harbor he is making for, no wind
is the right wind." A company’s strategic plan serves as a framework and
roadmap for moving towards its vision. It should be visionary and directional.
At Infosys, we have evolved strategic themes and corresponding key thrust areas,
which are evaluated against our PSPD (predictability, sustainability,
profitability and de-risking) model. Further, we have strengthened our process
for ‘impact analysis’ and ‘scenario planning’ that measures and analyzes
the potential impact of various policy decisions based on our strategic themes.

In conditions of slowdown, it becomes all the more important to delight
customers by delivering on-time and exceeding expectations. For this, speed and
efficiency are important. You need to constantly strive to make your
organization nimble.

However, during adverse times, organizations often tend to get carried away
with the imperative to change. Knee-jerk responses to external stimuli will not
bring long-term benefits. The key is to preserve your core and stimulate change.
At Infosys, each day, we ask ourselves these questions: "Are we doing
things faster than we did yesterday? Are we bringing in more creativity today?
Are we executing these ideas with excellence?" At the same time, at the
core of our operations is a relentless focus on quality. This is never
compromised. As a result, we have achieved a 24% reduction in delivered defects
over the last two years. Our average number of delivered defects is only
one-tenth the average for all SEI CMM level 5 firms. Further, over 94% of our
projects are delivered on time.

In challenging times, it is important that organizations focus on
measurements and models in all areas. What cannot be measured cannot be managed.
At Infosys, we have put in place robust processes for collecting data and
evaluating it based on benchmarks. We believe in the principle–In god we
trust, everyone else must bring data. Further, we have developed RoI and total
cost of ownership models in order to convince our customers of our value

Finally, tough times are necessary for building the character of a
corporation. Quoting Seneca again–Fire is the test of gold; adversity, of
strong men. The longevity and sustainability of a corporation is predicated on
its ability to weather such difficulties. Through long-term strategic planning,
through increased focus on speed and efficiency, by exceeding customer
expectations, by increasing productivity, and by focusing on measurements and
models, corporations can stimulate growth in times of adversity.

Nandan M Nilekani
The author is CEO, president and managing director of Infosys Technologies

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