‘In a volatile world, being adaptive matters’

Vinay Kamath | Updated on October 17, 2013

Rich Lesser, President and CEO, Boston Consulting Group,. - BIJOY GHOSH

Rich Lesser, President and Chief Executive Officer (CEO) of the Boston Consulting Group, has had a hectic travel schedule this year. India is the 31st country and Chennai the 52nd city that he has visited this year, he says. As the head of a global management consulting outfit, Lesser, who was appointed to this role in January this year, takes the incessant travel in his stride. Lesser’s client work has focused on innovation, strategy, and large-scale transformation in the health care and consumer sectors. Before joining BCG in 1988, Lesser worked in product development at Procter & Gamble. Lesser holds an MBA with high distinction from Harvard Business School, where he was a Baker Scholar, and a bachelor’s degree in chemical engineering from the University of Michigan.

Given the rather gloomy predictions that international agencies are making about India, what are you, rather BCG, advising your clients to do?

We are telling them not to confuse the short term for the long term. India has been challenged but the long-term prospects remain promising, and our clients need to recognise how much economic power is there in Asia. They have to be careful but they can use such times to invest. There is nearer term challenge for the leadership.

We are saying that India continues to be an important source of growth; the prospects are still positive and they should look at investments in the long term. The challenges they see are real and I hope the leadership can create the right investment climate for both Indian and foreign companies to invest.

Do you see a silver lining, then, in the India story?

The Government is starting to unblock some of the obstacles to investments. There’s a recognition that it’s not so much that India needs completely new policies but only needs to be consistent with implementing existing policies and the certainty that it can provide companies with what to expect. The main frustration I hear from business leaders outside is how difficult it is to invest in an environment of uncertainty. You don’t know when the ground rules change, and then you put a high-risk premium on investments and that’s not a good thing for India.

BCG works with business leaders around the world. What do you advise them in today’s VUCA (volatility, uncertainty, complexity and ambiguity) world?

Let me point to a few things that we see as the main challenges that leaders face. The first thing is finding value and achieving growth. The responsibilities of leaders to find growth that can find value for shareholders is getting more difficult. Second is the productivity challenge. Being fit to compete is a really high bar; the pressures on prices and costs are very high and the challenges come from around the world.

There are enormous expectations now, which was less ten years ago. In a world of volatility, the ability to be adaptive matters a lot; the ability to sense what is going on in the environment.

The fourth is dealing with the digital revolution and understanding how technology plays out across the value chain in addition to the interactions with customers. Lastly, there’s this challenge of having more pressures in the short term, particularly in an environment where there are more activist shareholders looking closely at quarterly data, and still keeping your eyes on the long term.

The challenge is to manage a multi-stakeholder environment, understand the roles of different players, be seen as a contributor to society. Those are expectations of leadership today.

There seems to be a dichotomy in the corporate set up today. In the older organisations, the CEOs are in their 50s, whereas in the new age enterprises, the CEOs are in their 40s or even younger. What is the leadership paradigm then today?

First, it’s healthy for the world to promote an entrepreneurial environment where people with talent and passion can build amazing new companies. It creates a dynamic spirit in society. For most older organisations the expectations are to operatein different parts of the world; they need managerial skills to nurture talent. It will be unusual to find that in someone in their 30s. The challenge is to develop the maturity and skills and still preserve the spirit of growth and experimentation. They have to be change agents. There are many examples of leaders who come into leadership roles in their 40s and be change agents. So, there is a place for both and we want both to exist. We want vibrant new businesses with young people who build something from nothing. And, we also want established companies to be innovative change agents.

The life of a CEO in an organisation is getting shorter. How are they coping?

It varies; depends where you are in the world. Yes, there are lots of different pressures; there is intense pressure to perform and they are under scrutiny from different quarters. The time when you could speak in a different way inside an organisation and a different way outside is gone! Transparency means you have to speak in the same voice internally and externally. Actions and words have to fit; many different constituencies are watching. The scrutiny and accountability is in one way good, but short term parameters can be unhealthy.

And, scrutiny from social media is also changing the way organisations respond?

Responsiveness is very important for organisations — one bad experience can be bad for an organisation. There are higher expectations about the way you treat your customer. When incidents do occur, the ability to react credibly and manage the situation is really important; allowing it to pass is a much higher risk.

What is the top debate in corporate boardrooms today?

The biggest challenge facing corporate boards today are three things: one is that many corporations are sitting on large amounts of cash; finding attractive investment opportunities, despite the macro economic problems around the world, and to still have good returns is the first priority. The second is navigating the regulatory challenges; it varies sector by sector, country by country, it has become a challenge in different ways. The point of innovation and technology to get ahead of the curve is hitting more industries and given the regulatory changes and competitive pressures, how do you become lean, using tech. There are few today who are not thinking about digital in the broader sense of the word and how it’s going to change what they can bring to their customers.

Published on October 17, 2013

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