How To Navigate Strategic Inflexion Points In Times Of Uncertainty And Disruption

One of the high points of the recently concluded Annual General Meeting of the Confederation of Indian Industry was a panel discussion on, 'Navigating Strategic Inflexion Points in Business'. Moderated by Vipin Sondhi, chairman, CII National Committees on Technology, R&D and Innovation, and Future Mobility, it also brought on the high table the acclaimed corporate strategist Shiv Shivakumar, operating partner, Advent International; Ram K. Reddy, chairman and CEO, Strategy R; and Deepak Jain, chairman and managing director, Lumax Industries.

Andy Grove, former CEO of Intel Corporation, who coined the term ‘strategic inflexion’ in the 1990s defined it as change that is inevitable–for good or bad. While today, in public parlance, it is broadly recognised for the after effects of sudden change like Covid-19 or the Russia-Ukraine war, Shiv Shivakumar argues that it also refers to a gradual process that ushers in transformative change. He highlights six curves of inflexion that could go up or down. These include market share, profit, top line, innovation, attrition and employee engagement.

The inflexion points can come from a variety of drivers, like deregulation, changing consumer habits, and environmental and societal changes. For example, since the opening up of Indian aviation 30 years ago, 27 airline companies have nosedived and vanished from the Indian skies. The changing preferences of Indian auto buyers from cars to SUVs have seen 43% of all vehicles sold in the last six months be in the latter category, and the market share of the market leader sputter to 42% from 55%. Again, in the field of entertainment, South Indian movies are clobbering the living daylights out of Bollywood. Why? Because Bollywood is following Hollywood.

Says Shivakumar, "Bollywood is making chicklet and soft movies, aping Hollywood. The South guys are doing ‘Nattu, Nattu’ and ‘bullet’ songs and really taking the market. That is a serious inflexion point for Bollywood, but they have not woken up. It is in front of their eyes."

Growing diabetes in the country has seen Haldirams introduce a sugar-free version of soan papdi, while global confectionery majors have been slower to react to this health crisis. While the privacy of data is a serious inflexion point, fake news is one of the biggest challenges in front of us at a media and societal level. The difference between truth, fake and false is very, very thin. In response, the BBC has introduced a new feature called BBC Verify, where a viewer can send the BBC news to verify whether it is true or fake. Adds Strategy R’s Ram Reddy, "A lot of times, companies make mistakes by taking conventional business models for granted." That is, when they do not see the onset of an emerging inflexion point.

Importantly, great entrepreneurs and innovators do not allow inflexion points to just happen to them, according to Sondhi of CII National Committees. Instead, they connect emerging possibilities and deep customer insights and explore new technologies to catalyse changes that can keep them ahead during major shifts in climate change, technology, energy, supply chain, health and education, he said.

People who operate at the very front end or at the cutting-edge across hierarchies are sales and service managers, but those in R&D are perhaps the ones who notice the early changes. But those changes are often not heard at the CEO’s level. So, an entrepreneurial CEO has to find ways to reach them directly.

Third, companies need to have systems and processes to spot lagging indicators like profits, revenues or return on investment or current indicators like operating cash flow, asset utilisation ratio or leading indicators like customer delight through global quality and employee engagement.

Fourth, organisations need to discourage silo working, focus on near-term success and fear of cannibalising one’s own successful products to reduce or even negate the possibility of spotting inflexion points. Many organisations that suffer or have suffered in the past from failing to recognise or plain refusing to recognise inflexion points have fallen precipitously. These include Nokia, Kodak, Intel and blockbuster videos. Instead, i-phones, Instagram and Netflix have emerged winners from these industry shifts.

Take one industry as an example: the automobile and auto components industry. The future of mobility is going to change dramatically. It was an industry which was stable for almost 150 years. Today, there is a massive transition that is happening which will be both incremental and exponential that will last for another 40 years driven by climate change and new technologies, said Deepak Jain of Lumax Industries. As recently as a month back, there was basically a ransomware attack on an Indian OEM company which actually stopped production for seven days, he said. The loss was close to 25,000 vehicles. “Today, we have to be prepared for not only black swan events but grey events where organisations have to be very agile and incredibly fast to ensure that you are back into normalcy soon,” he said

Further, changes in the industry are also triggered by the range of fuels or substitutes apart from petrol, diesel and gas: electricity, hydrogen, ethanol, methane and hydrogen. It is important to collaborate early with potential partners and be willing to spend money and infuse resources into the partnership even if it does not show immediate returns, according to Ram Reddy.

In this disruptive era of Artificial Intelligence and ChatGPT, when India is aiming to be a five trillion-dollar economy in a few years or a developed economy when India is at 100, navigating the strategic inflexion points is of primary importance.

George Skaria is the former Editor of Indian Management and Asian Management Review.

The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.