#552
Context: A few books and articles I read on the evolution of corporations.
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As I reflect on the evolution of corporations, it strikes me how drastically things have shifted over the decades. In the early years, say 1985 when I started my career, the purpose of a corporation was singular—maximize shareholder value. Financial capital was king, and everything else followed. Then, as the decades passed, intellectual capital took center stage. Corporations realized that talent, skills, and breakthrough ideas were what set them apart. I saw this transformation firsthand in my own career, where finding and nurturing the right people became as important as financial performance.
Now, in this moment of global uncertainty, the next shift is happening—and fast. Artificial Intelligence (AI), cost pressures, and a scarcity of talent are pushing corporations into uncharted waters. What comes next will be a new wave, demanding corporations to embrace a third pillar: adaptability.
It sounds easy, doesn’t it? But it’s not. Many companies are stuck trying to balance the old ways while adapting to the future. At the same time, they are facing increasing resistance from society. People may love the products but detest the makers—think chemicals but not the manufacturers, Google but not Alphabet, or Twitter, but not X-Elon Musk. This tension will only grow, and corporations need to get ahead of it.
Fail Fast: A Lesson in Innovation
One concept that has stayed with me since the early 90s is "Fail Fast." I had a senior manager who was known for taking intelligent risks, experimenting with shortcuts in manufacturing to bring new products to life. If an idea didn’t work, he didn’t waste time repeating it endlessly. Instead, he would nix the product, learn from the failure, and move on to something better. I’ve seen many corporations struggle with this—they cling to ideas past their expiration dates. In the coming decades, companies must embrace this ‘Fail Fast’ mindset to survive in a fast-paced world.
Companies like Amazon and Tesla have built empires on this philosophy. Amazon, for instance, is famous for its ‘two-way door decisions’—the idea that if a decision fails, they can quickly reverse it. Tesla’s approach to rapid prototyping has similarly allowed them to innovate far ahead of their competitors.
But in India, I wonder—how can this happen? How do we encourage companies here to take intelligent risks? The new generation will need to take over the wheel, steer, and drive us toward these innovations.
Embracing Digitization & Employee Pulse
Another pillar for the future of corporations will be digitization, especially in real-time interactions and monitoring employee pulse. Companies that don't understand their employees—specifically their flight risk—will see their best talent walk out the door. Employee empowerment is no longer just a buzzword; it’s a necessity. Take Netflix, for instance, a company that thrives on a culture of radical transparency and trust. Employees are empowered to make decisions, even if they fail, without fear of repercussions. Their 'no rules' approach to vacations and work hours is a testament to this.
Closer to home, companies need to do more to empower employees in ways that matter, not just with perks but by involving them in decision-making and being proactive about their concerns. Real-time employee feedback and tools to monitor engagement will become essential as employee mobility and flight risk increase. Money no longer motivates people and Indian companies are still come to terms with this reality.
Sustainability as a Core Principle
Sustainability is no longer just a CSR checkbox—it is a survival mechanism. We’ve seen the push from every corner of the globe for corporations to take responsibility for their environmental impact. Whether it’s through green energy, ethical production, or a circular economy, companies will be judged on their ability to make a positive impact.
Unilever has been at the forefront of this movement. By making sustainability a key driver of its business strategy, the company has both reduced costs and improved its brand image. In contrast, businesses that fail to address their environmental impact will find themselves on the wrong side of history. If companies don’t take this seriously, they’ll be left behind by competitors that do.
Agility Over Hierarchy
In the old days, rigid hierarchies helped maintain order, but today, agility is the key to success. Traditional structures are slow and cumbersome, unable to keep pace with the rapidly changing market demands. Corporations will need to move toward more fluid structures where cross-functional collaboration and faster decision-making are the norms.
Companies like Spotify have already embraced this model. Their "squad" system—small, cross-functional teams that work autonomously—allows them to innovate quickly and adjust to customer demands. We need to see more of this agility, especially in India, where many organizations still rely on outdated hierarchical structures that slow down innovation.
Decentralization and Localization
I’ve noticed a growing trend toward decentralization, where decision-making power is pushed down the ranks and localized. This could be the antidote to the "not in my backyard" mindset. By empowering local teams and building trust within the communities where they operate, corporations can reduce the tension between their operations and societal pushback.
We’ve seen global companies like Coca-Cola localize their operations, allowing them to navigate complex regional markets more effectively. In the coming decades, I believe companies in India will need to decentralize and give more autonomy to local teams to better respond to regional needs and sensibilities. I sense this will happen soon with outside people taking over management, (Chandra in Tata at presnt, May be Manoj Modi after Mukesh Ambani!? in future)
The Importance of Culture
The future of corporations hinges not just on strategy but on culture. Companies that build strong, purpose-driven cultures will find themselves better positioned to attract and retain talent, especially as younger generations prioritize meaning over money. We need to look at how purpose-driven organizations like Patagonia or even Tata in India have thrived, not by chasing profits alone, but by embedding a strong sense of mission in everything they do.
AI and Ethical Technology
AI will be a major player in shaping the future, but with great power comes great responsibility. How corporations navigate the ethical challenges around AI will define their legacy. Trust will become an essential currency, and companies that misuse AI—whether through biased algorithms or data misuse—will lose it quickly.
I often wonder how India will handle this AI revolution. While the potential is immense, the challenge will be ensuring that AI is used responsibly, balancing innovation with ethical concerns. Companies that build ethical frameworks around AI use will gain trust and stay ahead in this new era.
Risks on the Horizon
Finally, the corporations of the future must be ready for risks that aren't even visible yet. Whether it’s a pandemic, geopolitical instability, or economic shocks, those that plan for uncertainty will be the ones that survive. Companies like Johnson & Johnson and Toyota have demonstrated resilience by planning for disruptions and maintaining a long-term view.
It’s not just about reacting to the risks of today but anticipating the risks of tomorrow.
In conclusion, I’m deeply convinced that if corporations, particularly in India, don’t focus on these new pillars—adaptability, sustainability, agility, employee engagement, and ethical AI—they risk missing the corporation identity bus entirely. Leaders must steer their organizations toward this new reality, or else they will be left behind by those that do.
It’s time for a new generation to take the reins. The companies that embrace this will thrive; those that don’t will fade into irrelevance.
Let me know your thoughts?
Karthik.
22.9.24 930am.
Annexure... This image made me think!
Images are from Public Domain taken for information purpose.
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