Management in an Era of Growing Uncertainty
A friend working in the AI domain once told me: we need to introduce intelligence only because uncertainty is present. Uncertainty creates the need for choices and hence, decisions, and therefore requires intelligence. That is why we need managers, to take the hundreds of decisions that make organisations work.
The key word here is ‘uncertain’. We are dealing here with the element of chance in outcomes. We are also dealing with a future point of time that is unknowable. We try to get our hands around this unknowable future through various ways, usually based on extrapolating from past experience. In stable times, this may help to some extent. But as soon as uncertainty is introduced, such calculations are thrown to the winds.
What in the business environment has been uncertain in the past decade, that is different from previous decades? The financial crisis of 2008 was far from being a ‘black swan’ event, with several warnings that were ignored of the imprudence and greed of financial institutions leading to a major crash. All it needed was a trigger, and that alone was uncertain. Therefore, I hold that uncertainty is the reason that makes it necessary to have managers, capable of taking the many decisions every day.
The major economies of the West are slowing down. Per capita consumption of consumer products and energy is at unsustainable levels. Growth is happening in the EMs in Asia, Southern Africa, South America, and will also happen next in Africa. So, what do business managers need to understand and learn? What is the uncertain element in this future? I think we see with some clarity where the demand for our products and services is going to come from.
I worked in the healthcare products domain, and saw my company grow from a startup to the largest blood transfusion bags maker in the world over 25 years. When I started out, I recall thinking about disruptive innovations that would be a threat. The biggest such threat was the development of synthetic blood substitutes. Another threat was the decline in blood use during surgery made possible by developments in surgical techniques. What should a manager of such an enterprise be thinking about and preparing for today?
The usual managerial tasks remain the same. The main elements of the business ecosystem we work in is today quite predictable.
The uncertainties therefore are mostly about the way the demand for our products and services will behave in the future. Do we have a mechanism for tracking changes in demand behaviour? What are the disruptive technologies that are likely to emerge that will make our business redundant? Will changes in trade policies affect our business model?
The biggest source of uncertainty is disruptive technologies that are emerging. These are already changing the way we drive around on our cities, book hotel rooms and air and bus tickets, read the news and receive and send information etc. AI and Data Analytics are already influencing the way important business processes are carried out, and this is likely to invade every domain of business and work.
The way industry is structured and works will also change towards a model of outsourcing and collaboration starting from research and development, ideation through prototyping, testing, manufacturing, logistics, and customer servicing.
In such a paradigm, the buzz words will be: collaboration, cooperation, co-development, interdependence and ecosystem. The challenge before governments and regulators will be to evolve systems that will enable such entities to thrive. Kerala is well suited to put in place the conditions to enable such an ecosystem to develop and take root. Many of the necessary conditions are already present: power, water, roads, even urban development across the State, high urbanisation, urban amenities present in most taluks, literate and trainable population, good fibre and internet connectivity, mobile penetration, high HDI, healthcare facilities across the State etc. We need DICs to work as incubators, all district offices to work in sync etc. These are all doable things, and should be part of the reform agenda. All colleges and engineering schools and polytechnics should become community incubation centres.
Made in Kerala can thereby become a brand signifying high capability to manufacture hi-tech products in a cost effective manner.