Five geo-economic propositions for organisational leadership

Faisal Ahmed/Maneesh Kumar | Updated on July 14, 2021

These include enhancing domestic productive capacity, co-creating knowledge through technology and evaluating geopolitical factors regularly

The contemporary geo-economic landscape has compelled organisations to reconsider their leadership roles. Organisations across the world need to reject conventional monotonies of market share and profit, and borrow tenets from some sustainable business models, perhaps from countries like Japan or South Korea.

For instance, there’s a Japanese system called “Shinise”. Shinise are small businesses that have thrived for centuries or even a millennium! They are several thousands in number and carry a unique prestige and national pride. For instance, Nabeya Bi-tech Kaisha or NBK, which began as a metal foundry in 1560, is a Shinise that today manufactures miniature couplings, screws and elements for use in semiconductor and robotics industries.

Interestingly, what has helped these Shinise sustain is the value that they attach to continuity, relationship, tradition, and continuous enrichment of core business, among others. Similarly, there are examples of successful large diversified industrial conglomerates too. These include “Zaibatsu” in Japan (e.g. Mitsubishi) and “Chaebols” in South Korea (e.g. Samsung). Their success story truly reflects an organisational culture that is innovative and resilient, and yet people-centric and socially-embedded.

Today, organisational leadership must therefore cogitate on non-conventional geo-economic propositions. We recommend five such propositions.

Help enhance domestic productive capacity instead of engaging in industry rivalry: The pandemic has resulted in large scale global supply chain disruptions, and has also led to broken regional value chains in East Asia and elsewhere. This has compelled many countries including the United States to look inward.

Whereas, the US went on to become more protectionist, China too embraced the concept of “dual circulation” that not only focuses on export-led growth, but also on domestic demand and consumption. India has also been focussing on the concept of “Atma Nirbhar Bharat” that characterises self-reliance. With such measures in place, organisational leadership must focus on enhancing domestic productive capacity, and abstain from focussing much on industry rivalry.

Co-create knowledge through technology — merely possessing it is not enough: In a fragile and uncertain business environment like the one the we are facing today, business models too need a complete makeover. Technological resources alone do not give an organisation a unique capability to sustain.

Many small businesses suffered losses and had to shut down not because they lacked technological prowess, but due to the influence of external environment. Organisational leadership ought to focus on employing the technology to pro-actively co-create knowledge with other firms, and leverage it for garnering resilience.

Rely on people as your future, not employees: Some organisations consider their people as employees and human resources, but not all value them as their future. This pandemic has brought with it many lessons that organisational leadership must ponder on. Many have lost jobs, and many have not survived to carry on with their jobs unfortunately.

In both cases, and largely so in the latter, their dependants have been facing the harsh realities of life. The organisational leadership, must therefore, for today and for the future, ensure adequate healthcare infrastructure for their people at all level in the organisational hierarchy. One may need a life-jacket once in a blue moon, but it’s available below one’s seat throughout!

Consider CSR a necessity for social ecosystem — not a symbolic gesture: The pandemic, undoubtedly, has taught us the significance of a habitat and the social ecosystem. The social miseries, especially those for the underprivileged, that have accrued as a consequence of the pandemic needs active support from the corporate sector as well.

The role of corporate social responsibility (CSR) as a philanthropic activity is even more imminent. It can no longer be based on symbolism or as a statutory compulsion. The organisational leadership must therefore consider it as a necessity meant to build the ravaged social ecosystem, and thus simultaneously contribute to the sustainable development goals 2030.

Evaluate geopolitical factors regularly — they affect your consumers directly: Finally, let the organisational leadership not remain oblivious to the concept and implications of geopolitics. It affects organisational stakeholders in general, and the consumers in particular. Whether it is the geopolitics of the US-China power rivalry and trade war, or the calls to boycott Chinese products, or the urge of some firms to relocate their supply chains from China, the impact on small businesses and consumers have been intense.

It is therefore crucial for the organisational leadership to build a systemic process that helps forecast geopolitical risks, builds resilience, and enhances sustainability.

Faisal Ahmed is an Associate Professor of international business at FORE School of Management, New Delhi, and Maneesh Kumar is Associate General Manager at Technip Energies, Noida. Views are personal

Published on July 14, 2021

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