Public Sector in India: Diamonds are Forever!

The emphasis of the Central Public Sector Enterprises (CPSEs), public, economists, and the government in India seems to be only on CPSE disinvestment, and monetizing the value for the government to help rein in the fiscal deficit. While this is also mandated by minimum public shareholding norms and, in some cases, straightforward privatization goals, the ideal route for the CPSEs would be to issue additional shares to bring in public and foreign equity. This would certainly strengthen the capital structure of CPSEs and let them pursue a higher scale with enhanced technological capabilities. Stake dilution as per the existing methodology tends to be a constant overhang on the stock market price for the CPSEs, thus limiting capital raising at the rich valuations they deserve. Alongside, CPSEs should pursue operational excellence and value creation initiatives for higher market capitalization.

As contrasted with realization from stake sale, enhanced annual dividends from operations would be a recurring source of income from the CPSEs for the central government. This requires adoption of strategies and techniques of competitive advantage by the CPSEs. Notwithstanding the natural monopoly provided by certain segments and the advantage provided by scale and longevity, all CPSEs must operate competitively. A firm such as BHEL must seek to beat L&T in market capitalization and there should be no reason why Shipping Corporation should accept a lower EPS than say, GE Shipping. Exciting opportunities truly await the CPSEs. The central government should start taking its ownership of CPSEs as a perpetual value-enhancing asset that would pay increasing dividends, not only to state exchequer but also to the larger economy!

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Strategy, Structure, and Execution: The Essential Leadership Trilogy

If the crux of leadership is the strategy–structure–execution trilogy, the essence of success lies in how well aligned and integrated these three components are. Several business case studies demonstrate how these three are to be aligned and integrated from a forward-thinking perspective. It involves proactive risk-taking, and also a belief in the model to overcome all competitive opposition. Despite the well-laid plans, there could always be surprises; for example, AirAsia did not imagine that the Tata Group would form its own joint venture with Singapore Airlines for the Indian civil aviation market (Vistara). Only when strategy, structure, and execution are aligned with due flexibility and continuous calibration, firms can cope successfully with surprises.

The ability to cope with surprises comes with flexibility in trilogy components rather than trying to make them risk-proof. There will always be internal and external variables that cannot be forecast and could impact the starting assumptions of any venture, organic or inorganic. Depending on the nature of the surprise, one or more of the three elements of strategy, structure, and execution would need to be differentially emphasized to manage the surprises. Rather than an elaborate organizational bureaucracy, a small leadership group often provides the drive for a successful trilogy. Tata Motors' success in achieving a successful bid and an even more successful turnaround of the JLR infrastructure is a case study in itself of strategy–structure–execution operating in impactful alignment.

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Digital Technology and Human Mindset

As technology develops, sophistication is bound to increase. The objective of technological sophistication is better need fulfilment. That said, there tend to be complexities and subtleties of sophistication. Complex technologies require expertise to design, manufacture, and market. The designers must understand the needs of lay persons who use complex technologies while users must understand the full potential of such technologies. An insulin pump, for example, must be designed with all the advanced heuristics that are required to manage the complexities of multifactorial diabetes. At the same time, it must also consider the fact that a child could be a user and ensure simple and error-proof operation. A teenager or an adult who invests in a sophisticated smartphone must, on the other hand, take the embedded technology as given but expand his or her knowledge of its hardware and operating system to push the utilization of the phone to its design limits. Technological functionality needs to be converted into user experience.

The educational ecosystem must evolve to cater to the technological challenge; it must provide fundamental knowledge as always because it equips a person to serve a variety of functions and industries. However, it must also help the human mind to harness the full potential of its own developments. In other words, the new generations of humans, regardless of the domain, cannot be technology naive. The taxi driver of tomorrow, even in the emerging economies, cannot be ignorant of technologies. He or she must be capable of being a part of radio calling and distributed dispatch network, and have the ability to adapt to a wide range of electronic payment systems. The customers too must be able to move on from conventional debit or credit cards to mobile wallets, for example. Digital devices are the answer to the call of the future but require more than just technology to deliver the full promise.

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