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Need
for professional yet entrepreneurial CEOs to refocus
Strategic
actions combined with entrepreneurial skills provide the right mix
in the making of a successful CEO, says Dr R B Smarta
Successful
CEOs will need capabilities to merge strategic action with entrepreneurial
action on an ongoing basis. Strategic management focuses on achieving
competitive advantage within an industry and market context through
professional management. Entrepreneurship seeks to exploit opportunities
others have missed or ones that have not been completely exploited.
Thus, strategic actions of a professional provide the context within
which entrepreneurial actions are pursued. It’s difficult to
understand and make perfect union of both for the benefit of the
organization.
Six
domains
Ireland
model illustrates the interface between the strategic professional
actions (advantage-seeking behaviour) and the entrepreneurial actions
(opportunity-seeking behaviour) of a firm. After all, enterprises
as well as organizations are capable of and should be capable of
creating wealth.
To
create wealth, firms need to establish linkages between entrepreneurial
actions and strategic professional actions within six dominant domains.
Innovation:
First, the competitive mindset of managers must be based on innovation,
and innovative efforts of the firm must be managed, professionally
and strategically. The objective is to make innovations that are
well-timed, consistent with marketplace realities, difficult to
imitate, and that fit well with the firm’s core competencies.
Thus
from the above domain that a CEO has to really change his own profile
and personality. Irrespective of whatever background he has, he
needs to adapt and develop an innovative mindset. The risk taking
mindset which he already has, need to ensure that the organization
gets the benefit of his innovation and risk taking abilities. Regarding
his approach to strategic professional management, he has to also
ensure that his organization has those core competencies to implement.
This also needs speed to market. If it is concerning to organization,
to ensure that the mindset of managers is transformed through training
and other HR interventions.
Creating
network: Secondly, entrepreneurial and strategic professional actions
are used to create and exploit networks of relationships between
the organization and other organizations and individuals. Such networks
provide the firm with access to competitively valuable information,
enable faster market penetration, allow for risk sharing, and enhance
the firm’s innovation capabilities.
Many
a time, CEOs may find that the necessary skill and competencies
are not existing in the organization. In the new economy, it is
really difficult to acquire all competencies under one roof. Hence,
he needs to also look at right networking and alliances so that
he gets the benefit of outsourcing.
Global
opportunities: Thirdly, entrepreneurial and strategic professional
actions must combine to facilitate the exploitation of global opportunities.
Tapping global markets require product innovations, innovations
in management systems and structures and innovative use of networks
and alliances, all of which must be managed strategically. It’s
not enough to look at only domestic markets as slowly but surely
domestic markets are globalising.
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six
dominant domains
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It’s
only a matter of few years and international global marketing practices
will thrust upon India and we will follow the same to satisfy customer
groups. Look at the transformation which is happening after the
entry of McDonalds in India whereby customers are responding to
"speed" as well as different kind of foods than age old
Udipies and Narulas. Same will be the situation which will follow
in pharma. Over the years the practices and procedures will take
shift towards international practices and procedures. Hence, it
is very important to look at global opportunities, entrenching global
markets with generics and learning from these markets to develop
competency in domestic markets.
Organisational
learning: Fourth key domain is organisational learning. Companies
must make a strategic commitment to learning and to rapid transfer
of knowledge through-out the organization. As I have touched upon
the organisational learnings which is an important domain of this
entire pattern of working of CEOs, every CEO must be sensitive enough
to pick up such clues from the global opportunities so that he institutionalises
them through learning processes in his own organization. Learning
is intimately tied to successful entrepreneurship.
Intellectual
assets: Fifth, but a key task of company leadership is to enhance
the firm’s abilities to use intellectual assets both strategically
and entrepreneurally. The fifth domain is concerned with the top
management team and governance structures in the firm. In case of
top management and governance over a period of time CEOs will have
to spend literally fighting time as he needs to govern corporate
affairs, societal affairs, market and marketing affairs as well
as he needs to also look at the resource utilisation of all those
resources which are required to produce business and wealth.
The
last and sixth domain is obviously the ultimate outcome of this
entire process which is nothing but growth. It’s easier said
than done by one person alone. As a result, boards of directors
must be accountable for entrepreneurial direction and performance
while management team must take up strategic professional focus.
Indian
pharma scenario
Today
growth is an important issue for national companies (NCs), multi-national
companies (MNCs) and small & medium enterprises (SMEs) in India.
The opportunities for different players are likely to be different
in next 10 years which are partly expressed in the diagram.
The
population of India per say which will grow to 1,200 million will
definitely get polarised as shown in the diagram. Chances are that
the 200 million people (M1) will get attracted towards health insurance
and hence useful for patented products, hospitals/medical products
and also premium price branded generics. Obviously, this market
would be useful for MNCs, Indian MNCs and major NCs. Besides this,
there is a possibility that these organizations can procure exclusive
marketing rights (EMRs) for promoting exclusive brands.
Around
800 million people (M2) will be handled by niche players, SMEs,
OTC players, biotech players as well as generic players.
This
market will also respond to all alternate medicines. Hence, those
organizations who would like to explore and exploit this market
need to find opportunities through different portfolios.
Yet,
after this polorisation perhaps 200 million people (M3) will still
remain unorganised, poor and may not be able to afford the modern
medicines which could be useful for regional and other small players.
Besides, all of us know that post 2005, the US and UK generic market
is opening out which will provide enough chances for domestic as
well as global players. CEOs of different organizations will have
to look at the difference towards their opportunities. Once they
seize these opportunities they will be marching towards growth.
Growth
can come from changes in the external environment or from inefficiencies
in existing markets. No matter the rate of growth, the objective
is managed growth and properly designed and executed strategies.
Two
other perspectives are helpful for all CEOs as we try to draw a
picture of the Indian national/multinational organizations of tomorrow.
The first perspective will dominate portfolios and specifically,
conceptualising the company as a collection of portfolios. Portfolio
thinking is about a strategic balance in which the company balances
a mix of objectives such as risk versus return, income versus growth,
and short term versus long term performance.
These
new organizations will be built around four major portfolios:
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Portfolio of competencies - the set of skills and capabilities
that capture what market offers
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Portfolio of resources - the set of financial, physical, human,
organisational, relational and intellectual resources that are
innovation enabling.
-
Portfolio of innovations - a balanced mix of new products, service
and process projects.
-
Portfolio of venture and small businesses - the devolution of
the company into a confederation of small businesses that have
autonomy but whose contributions can be seamlessly coordinated
and integrated. Second perspective will be based on evolution.
The organization of tomorrow will be one that continuously cycles
through periods of rapid evolution and periodic revolution. Change
will be the norm.
The
writer is managing director of Interlink Marketing Consultancy Pvt
Ltd
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