Corporate File

Five thoughts for 2022 — a build back year

Shiv Shivakumar | | Updated on: Dec 19, 2021
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Crystal ball gazing into how the year ahead will pan out for corporates, start-ups, investors and employees

I write this piece with a bit of trepidation, since I got all my five predictions right for 2021. I had forecast that mental health would become a big issue, families would get more prudent over finances, there would be a crack down on social media, etc.

A WIP country

India will turn 75 in 2022, a landmark year. Very few backed India in 1947, when literacy was 12 per cent and average life expectancy was 32 years. India has come a long way and it still has some distance to go. I believe India for the next 30 years will be a ‘work in progress country’; we will achieve a lot, lag behind in some aspects and lead in some digital measures.

My five predictions for 2022 are:

Nation norms vs. ideology of tech companies

The concept of a country is 400 years old and nothing has challenged it till date. Boundaries have defined countries. However, digital companies know no boundaries. Big tech companies with global ideology have the clout to challenge country rules, while coming to crossroads with them. This is global. An India focussed on Atmanirbhar and getting its narrative out will experience flash points. I believe we will see new judgements on citizen rights to post what they want, and the rights of big tech to censor it in a manner that protects free speech, yet is not divisive. This is not easy, and we will see more court cases in 2022. Who determines what’s free speech vs. divisive speech will be hotly debated and in 2022.

The start-up system — boom, bust and stutter

The start-up ecosystem was on steroids in 2021. Normalcy has to set in 2022. I predict many big failures, few successes and many stutters. 2022 will be a wake-up call. Most start-ups are pivoting from B2B to B2B2C to being a D2C business model. In the D2C space, when acquisition numbers wane, they move to advertising revenue models.

I believe in the digital ecosystem, but I don’t see new adjacencies and markets developing and current markets growing. We saw more than 1,500 D2C food brands launched in the last few months, however the food market is not growing any faster! Without fundamental market growth, start-ups will blow up monies on customer acquisition costs and show subscriber base — some paid, mostly unpaid. Unit economics will be in poor shape in most start- ups and that’s one measure to track for investors.

Employees in start-ups realise that they are highly paid and will possibly experience haircuts in their next job. The smarter ones will leave before the scissors come out.

People will seek meaning.

The pandemic break was a period of introspection. The purpose of one’s job, career and life have come into sharper focus as people look at their priorities and aspirations with fresh eyes. The meaning and importance of time, health, family, salary, and savings were and will continue to be re-evaluated. Life coaches will be in demand as people seek meaning in both their personal as well as professional lives.

Employee attrition is 20 per cent in India and it’s unlikely to ease off in 2022. According to the Oracle Workplace Intelligence report, forty four per cent of Indians said they were impacted financially in the pandemic and 37 per cent said that they experienced mental health issues.

Employees will stay in companies that showed them loyalty, in terms of salary, in terms of bonus, in terms of job security and vaccination help. Companies will bend backwards — offering choice and flexibility, while expecting innovation in HR policies. Employees will seek career counselling and mental health therapy. Both will be big businesses. Employees will do this outside the organisation to maintain confidentiality. In Oracle’s recent survey, 97 per cent of Indians said they prefer talking to a robot vs. their boss about their mental health and career issues, as they were certain of getting an answer, sure of privacy and sure to get an unbiased answer (not company speak).

Two new, different types of investors

The population in India participating in the equity markets is about 5 per cent, compared to 13 per cent in China and 55 per cent in the US. India has the maximum number of listed companies in the world, a little over 5,000. So, there is a lot of headroom for investing.

The first type of investor is the young Gen Z investor.

In the last two years, 17 million new investors were added to the NSE. Since April 2021, NSE saw 5 million new young investors, who accounted for 62.5 per cent of all additions this year. Young investors want a quick return and they take risks; they don’t stay in a stock, they churn their portfolio rapidly for quick returns. Expect more of them to come into the market in 2022.

What is the second category of investors? As companies raise capital from PE/VC funds, the demands from these investors will increase. This will lead to well-wisher investors at one stage turning ‘activist investors’ at the next stage. We will see more cases of the PE/VC executives calling the shots in 2022. This will spur a CXO churn.

CEO movements

The average lifespan of a CEO or a CXO in India is about four years.

Many CEOs and CXOs kept their roles in the last two years because of the pandemic and companies were wary of making changes, irrespective of results. This will change. Companies will make changes in CEOs and CXOs in 2022 for two reasons — the necessary pivot to digital leaves incumbent CXO’s skillsets inadequate and most legacy companies are losing market share to upstarts and digital companies. Expect churn, revolving doors and leaders with digital skills coming into the corner office. So, polish your CV if you are a legacy CEO and also a CXO looking for a CEO break!

As I mentioned in my note last year, most countries will get back to their 2019 levels of GDP by 2022 or 2023. So whether for a country or a company, 2022 will be a ‘build back’ year. Caution, and not courage will define the corner office.

 

(Shiv Shivakumar is Group Executive President - Corporate Strategy and Business Development, Aditya Birla Group)

Published on December 19, 2021

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