MBAUniverse.com Interview: Companies that understand long-term impact of current turmoil will enjoy big opportunities, says former HBR Editor Thomas Stewart

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MBAUniverse.com News Desk |
July 24, 2016
What do leaders need to know to lead effectively in these turbulent times? What issues are keeping top executives up at night? How can superior intellectual capital and knowledge help?

Former Editor and Managing Director of Harvard Business Review and leadership expert Thomas A Stewart has some answers to these waxing questions.  

Known as a pioneer in the area of Knowledge Management and Leadership development, Stewart was also the Editorial Director of Business 2.0 and a member of the Board of Editors of Fortune. In a series of Fortune articles, he pioneered the field of intellectual capital, which led to his groundbreaking book, Intellectual Capital: The New Wealth of Organizations, The Wealth of Knowledge: Intellectual Capital and the Twenty-first Century Organization. Stewart is currently the Chief Marketing and Knowledge Officer of Booz & Company, a global management consulting firm. 

Stewart will be in India this month to address a seminar titled 'The Leader's Agenda' in Mumbai on November 13, 2008. The seminar will be organized by knowledge management company Innovative Media. India's leading management portal MBAUniverse.com is the Official Management Portal of this seminar. MBAUniverse.com caught up with Steward ahead of his India visit to know his views on some burning issues.  

Excerpts from this exclusive interview:

Q: Given the recent turmoil in the global financial markets and threat of major slowdown in economies around the world, what do you think are some of the key challenges facing Business Leaders around the world?

A: This is the most challenging business and economic environment I have seen. It looks like we're in for a long, deep recession in OECD nations and certainly slower growth and perhaps no growth in emerging markets. The financial sector is weak worldwide, will be restructured, and will be regulated in new but so far unknown ways; there will be consolidation—m and a—in virtually every industry globally. And at the same time great trends continue to unfold: the need to decarbonizes the economy, the impact of the world's new demographics, the changing role of the corporation in society.

Close to home, CEOs will have to make sure they are operationally fit. With capital markets hard to use, they will have to free up working capital. They should be rethinking supply chains for a low-carbon world. They should be looking closely at their talent-management pipelines worldwide. And they should look very carefully at how the downturn is affecting consumer behavior, because the recession's impact on demand is uneven. Work we've done at Booz & Company shows that customers don't just cut their spending across the board—the pattern is much more varied and there are big opportunities if you analyze things.

The biggest opportunities will come to companies with the foresight to understand the long-term impact of this turmoil. Given the other trends, including the rise of the BRIC economies, we're likely to see the global reshaping of many industries.  CEOs with vision, courage—and capital—will be able to use this turmoil to very great advantage

Q: What are key expectations from Business Leaders today, and who are turning out to be great CEOs/ Business Leaders? What are they doing right.

A: I think I just said it: vision, courage, and capital. You need all three. Look at the industries that are transforming before our eyes: financial services, obviously, but also pharmaceuticals, automotive, telecommunications, transportation, infrastructure, energy … I don't want to cite individual CEOs but the people who are getting it right are operating lean businesses, and investing in the capabilities that will be needed in the future.

Q: How do Knowledge Management and Intellectual Capital play a role in meeting challenges of today and tomorrow? Are they critical to business success?

A: Capabilities are the key here. A strategy that merely says "go where there are deep profit pools" or "go where the growth is" won't actually get you very far. You're far better off understanding your capabilities, and building your strategy from there; and understanding the capabilities you will need in the future, and obtaining them. That is building and using intellectual capital.

Q: How can business leaders and managers generate superior Insights and understanding of where the world is headed? What's your advice?

A: Get out of the office! Talk to people. Even more important, listen to them.  Be curious about the world. Read the newspaper, not just the Web. Read novels and read history.

Q: How are Indian businesses that play in global IT, services, manufacturing markets placed in the turbulent times? Will they get impacted with slowdown/ crisis? 

A: I am not an economist and won't predict markets. Two observations, though: first it's obvious that "decoupling"—the idea that Indian, China, the Middle East, etc. would not be affected by a downturn in the G8—has been discredited. We're all going to be affected. The US and EU are about half of the world's GDP and it never made sense, in an interconnected world, that the fate of one half would be irrelevant to the other. Second, IT services may be one of those industries where there is as much opportunity as there is pain. It would not surprise me if more companies decided to outsources IT services ;that will increase demand for some Indian companies (and some non-Indian firms). On the other hand, there will be fewer new computers needing help-desk calls; fewer e-commerce sales; fewer credit-card and other back-office transactions. So IT services will be affected.

Q: While India has been a global thought leader till three centuries back (pre-1700 era), it lost its way. As a resilient economy and global consumption hub, how can 'Indian Management Thinking and Practice' find a global audience? How can India create global best practices, like the Japanese did in 1980s?

A: It's useful to look at Japanese practices with Michael Porter's framework, seeing clusters (for example of consumer electronics companies) and activities (like the Toyota Production System) that produced competitive advantage. It may be that the Japanese cultural disposition toward consensus supported both of those—tough I am leery of cultural determinism. I wouldn't worry about creating Indian best practices. I'd try to create best practices that happen to be Indian. Those will inevitably be shaped by the characteristics of the Indian market and its people.

Q: What's your advice to management students and young executives? How should they plan their careers in these times?

A: By not planning in too much detail. The business world is changing at a tremendous rate, and someone who locks into a single career trajectory is not likely to be right. Be ambitious, energetic, interested, humble, and flexible.