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Cover Story
 
INTERVIEW
“Focus must also be on revenue growth rather than just cost”
Venugopal Krishnaswamy, Service Line Leader, Strategy & Transformation, India GDC, IBM talks about the new imperatives for CEOs
Issue Date - 30/04/2012
 
B&E: When you talk about CEOs and their role in organisations, do you see a paradigm shift in the pre-Lehman and post-Lehman Era?
Venugopal Krishnaswamy (VK): It really goes back to 2001-02, when the Enron thing started to unfold. Of course the Lehman debacle was more impactful in terms of how it transformed the role. I think one of the major things that have happened is that the CEO is now much more cognisant of corporate governance. In the post-Lehman era, the CEO has to be more far reaching rather than just retaining a short term focus. For instance, at IBM, we have communicated to the worldwide analyst community our goals for 2015. We have a public statement on our EPS then at around $20 per share.

B&E: What are the perspectives of CEOs in this economic environment that you are observing? VK: I’ll give you one story from my perspective and this is about Japan, if you look at post-March ‘11, since the earthquake/tsunami hit Japan last year. We surveyed a majority of CEOs there to see what their top three strategic imperatives are. The first is globalisation. For us, what that means is how to look at customer acquisitions in markets outside the traditional Japanese market and also how to diversify operations, primarily networks. Players like Panasonic actually had a disruption in supply chain due to their operations in Japan. So they are looking at increasing networks in other countries, primarily in emerging countries and that’s where the India story fits in quite well. For Panasonic, we are looking at how they can develop and implement a market entry strategy for some of their products in India. The CEO of Panasonic India is working very closely with his Japanese counterparts.

B&E: When it comes to benchmarking with global CEOs, what must Indian CEOs focus on?
VK: A couple of things come to mind. The first is, “What are you doing in terms of customer experience.” We are seeing a lot of it in telecom. If you look at players like Bharti Airtel, the board and CEO have appointed people to really understand & manage customer experience well. The other area is social media. Basis our discussions with CEOs, there’s a lot of thought on where social media is headed and what are its implications for Indian markets. Companies are looking at some of the things that early leaders are doing in the west.

B&E: What are the critical red flags for CEOs today?
VK: Obsessing about the current quarter and not look at the environment or the health of the company could be the biggest mistake. Also, things like employee productivity are getting a lot of focus. In the post-Lehman environment the radar is obviously tough, but look at it from a numerator-denominator perspective. If you are looking at increasing EPS, it’s a given that you’ll focus on cost management. Now cost is the denominator and revenue growth is the numerator. Focussing on employee productivity and cost management is good, but if you continue to squeeze and squeeze, you are going to get as close to 0 as possible. If companies focus instead on revenue growth, that’ll give them a significant upside in the future rather than just focussing on the denominator that is cost.

 

Virat Bahri           

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