Fight the slowdown

The present downturn has sent much shockwaves among the CEOs than earlier downturns in 1997 or 2002. They have realised now how big companies like GM can even not survive. While It was crime to speak too much beyond you can do like in Enron till now but it is self defeating in present situation. Even General Motors which had been talking of resurgence in market share have not been able to even sustain the downturn rate. As an Indian saying goes that “Whatever you eat is what makes you think. Whatever you think is what makes you speak and whatever you speak is what makes you act, So keep your food right to keep your action right”. The hoopla created by big companies will no longer be a survival strategy. The reality and being true to your organisation and stakeholders will define the success or failure of an Organisation in coming future.

The time has come when the companies will look not on their Income but again cash in hand. The cashflow would define the prospects. The method followed through leverage having shown the tricks to businessmen, they will be cautious now onwards to take it day by day basis rather than quarter basis. The look for quarterly growth and yearly growth would soon shorten to daily growth. “Look and Judge now” should become the mantra of Organisation heads rather than “act now, reap now and let them face the results”.

The miniaturization of Organisation would help one evaluate the work of each one more judiciously as well as it would make the company more result oriented rather than function oriented. Companies like GM would have to live in new age world as a co-branded company. The Customer would directly know who all involved in this product and hence make a decision on their own. The Automobile industry would also look for a concept like dell where you customize a car of your own choice pay for it and get deliverd in a week at your doorstep. Going more deeper into this aspect would reveal similar future for other consumer segments too.

The Research and development Expenditure will have to be spent judiciously and selectively. The output oriented approach as addressed by several marketer would not work as many researches are a result of serendipity itself. But studying market flow and understanding the wave of market would definitely help the CEOs to get direction. As dicussed above the R&D organisation would also thrive on their core competence. A concept of central funding can be brought into action where a group of companies or consortium would invest in few r&d companies to develop product for them. This would make it easy for companies to focus on their output and goal.

But at the end of all such discussion, we should not forget the thriving rural business. So what should be done to tap this market? The fundamental difference lies in the rural-urban divide in term of growth and development. Definitely the rural areas are lacking behind the urban areas by at least 20 years. The buying behaviour much depends on the social aspirations which drived the urban business few years back. But then comes another fact that volume for costlier products is less in this rural market. So, Organisation should come up with innovations in all the segments suited for this market in the income range they can pay. Here you just need to build the market simultaneously also through making cash flow easier. The rural customer would be a lot happy if he feels himself secure and well connected in a developing and growing environment. So a holistic approach from all products would make the market afloat. Huge investment in one sector would just create a short term demand. The solution is orient your business towards rural sector with all other products of various needs also available at their doorstep, Then the money will have a continuous flow and make everyone happy.  

(c) Sujit Kumar, IIM Kozhikode 2009.