Emerging Patterns in the Crisis Economy
As we watch Capitalism version 2.0 pan out, we are acutely aware of the changing role of government, financial institutions, equity markets in the new landscape. However, look below the surface. The new dynamics are also resulting in a fast-changing kaleidoscope within, with new patterns beginning to emerge.
There is new life kicking in amidst all this talk of gloom and doom.
We are witnessing a burst of fresh entrepreneurial energy as the changing environment encourages people to step out of their comfort zones. The need to think afresh about what works and does not work in the new world is resulting in the birth of new venture ideas and the building of innovative SOHO operations in niche sectors, such as a start-up business insuring your car loan payments in case of layoff.
Across organisations, we are witnessing changing work models. There is a shift from measuring input to evaluating outcome; from rewarding effort to incentivising results. These changes, which began some years ago with the growing popularity of Robert Kaplan and David Norton’s Balanced Scorecard, are spreading further with more and more companies adapting their performance management systems to align individual goals with collective business goals.
Performance is becoming the key differentiator in these times. As a recent Business Today Survey revealed, with salary increments going into deep freeze even in India — an economy that is still showing positive growth — carrots now come with sticks. It is variable pay, based directly on performance, that will now be the differentiating income.
We are also seeing changes in commercial models. More companies are offering performance-related pricing, thereby forming a partnership of trust and mutual benefit with their clients.
At HCL, rather than being led by the changed circumstances, we have led the change. (If I do say so myself!) Our belief in aligning IT to business goals, performance-driven pricing, a value-centric approach, employee centricity, accountability, transparency and inverting the pyramid began far before the new environment dictated change. This investment has paid off well. As we move forward, we intend to continue to be a change leader and are already sharply focused on areas such as high-value integrated services and utility computing.
As the world emerges from the slowdown, it will not come back to the same shape and size that we are accustomed to today. There has to be a shift in the mindset: an increasing endeavour to be the most valued rather than the biggest; an increasing grip on discipline, governance, cost efficiencies; a focus on sustainability. As we look forward, I truly believe that going forward ‘lean, mean and hungry’ is the best way to thrive.
I have no doubts that there are many other manifestations of this kaleidoscopic change and welcome your comments pointing out more. As leaders across the board align their businesses with changes in the external world, we could all learn with each other’s experiences in fostering agility, positive thinking and resilience.
Originally posted on Vineet Nayar’s Blog site on Harvard Business Review: https://hbr.org/2009/05/emerging-patterns-in-the-crisi.html