- We are witnessing a unique explosion of new business building
Kumar Mangalam Birlain its annual reflection paper of 2022-23.
- Compromises made by companies in the interests of growth, and alarms have sounded too late, he says.
- Core metrics such as operating profits, gross margins and cash flows have lasting resonance across all business cycles.
- He quotes Top Gun Maverick – the 2022 sequel to the 1986 film Top Gun – if a great example of combining brand power with excellence to win over both GenXers and GenZs.
There are no shortcuts to business building, says Kumar Mangalam Birla, the chairman of the Aditya Birla group, in his annual reflection paper for 2022-23. He also added that we now live in a world of increasing opportunity and increasing uncertainty.
The 55-year-old head of one of India’s oldest and most profitable corporate groups said we are witnessing a unique explosion of new business building thanks to the availability of capital, coupled with young talent brimming with ideas.
Hustle vs. Hubris
“There is much to celebrate and learn from the raw energy and bustle of many of these new ventures in the startup ecosystem. At the same time, it is also becoming increasingly clear that there is a thin line between busyness and overconfidence,” says Birla.
In his view, companies – new or old – need to get a few things right to strike the right balance. He pointed out problems and also made suggestions. At the very top are the compromises companies have made in the interest of growth – alarm bells having rung too late.
“Unfortunately there have been too many examples of teams embracing shortcuts lately. Build for the long term and create a culture of values, where actions are more important than slogans,” he said.
The stats that matter
Incumbents and insurgents should both “own the offensive moves,” according to Birla, who runs the metals-to-retail conglomerate.
Big bets should be orchestrated based on fundamental strengths – better
He emphasizes that there is value in core metrics such as operating profits, gross margins and cash flows – terms that have lasting resonance across business cycles.
Wing it like
However, we live in a world of shorter business cycles, where technology changes and consumer needs evolve. “For a group like ours, it’s a unique challenge to harness the confidence and stability that come from longevity while ensuring we can continually reinvent ourselves,” he said.
In this context he cites the example of the recent hit Top Gun Maverick, which grossed $1 billion at the box office in 2022 in its very first month of release. It’s a sequel to the 1986 original that catapulted protagonist Tom Cruise to stardom. But those who have seen this film are not only nostalgic GenXers but also GenZs, who enthusiastically embraced the film.
“This is due in no small part to the drive for cinematic excellence, the dedication of a star who still does his own flying, and the imagination to reinvent and build for the future,” Birla tells the story about how old and new can come together.
How’s the future?
Many business leaders struggle with new and evolving business needs. In a survey by PwC, 41% of Indian CEOs said they do not expect their company to be economically viable in ten years’ time if they continue on this path. They also see multiple challenges to profitability within their industries, as they believe they would be operating in a very different scenario than they are used to.
About 62% of CEOs in India believe that changing customer demand will have a major or very significant impact on profitability in their respective industries over the next decade. Birla also says companies face difficult conundrums such as leveraging brand power, distribution power with technology, forward-looking product pipeline, consumer relevance and a flexible workforce.
“What are the bets that see through the short-term fads and translate into sustainable benefit? I don’t have the answers to all of these questions, but take courage from some of the unique experiments we are doing to find solutions,” says Birla.
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