Think New Think Change

30 July 2012

Think New Think Change

The Speech Delivered by Mr.R.Kannan at SIES School of Management

On the Occasion of Induction of New Batch of MMS Students

Prof.Sengupta, Prof. Radhakrishnan , Prof. Bose , Dear faculty members and young friends, Good Morning to all of you. I would like to thank Dr.Sengupta  for the invitation extended to me to be part of this programme today in welcoming the new batch of students to this  prestigious programme on Management in SIES school of Management.

The environment we live today is very dynamic and ever changing. We are living in a world of constant change. There is a great level of uncertainty and volatility in all walks of life. The challenge for mangers of the Economy and the Businesses is to navigate these changes and develop a stable economy and business operations. The viable Economic models and Viable business models of today will become unviable in future. The systems which were viable in the past are no more viable in the changed circumstances. The economic models of development and business models are undergoing significant changes. We are living in a complex world , many new issues crop up every day for which there are no immediate solutions or remedies.

Economy. The effects of recent global crisis has made it necessary for new thinking in managing the present day world. There are many debates around the world on how to overcome the crisis in so called developed countries and bring back the economic growth.  The solutions are still eluding and no robust model for restoring the global economic stability has been found so far.  In all these years thinking was that the global growth has to be supported by growth in the so called developed economies like US, Europe and Japan. The growth in the developed countries had lost the momentum and the incremental growth in the global economy is mainly contributed by countries like China, India, Brazil and Russia. The future prospects of growth lies in less developed countries like Vietnam, Colombia, Indonesia, Turkey and Africa. Considering this fact, there is a need for change in Economic systems. The developed countries should be willing to share the future leadership with the emerging countries today. By encouraging the countries with potential for growth, the overall economic growth of the world could be restored.

Financial Architecture. To sustain the growth levels in the economies the developed countries kept very low interest rates. This has enabled the governments, corporates and individuals to borrow at affordable rates. But after a stage, the borrowing by them became unsustainable since they accumulated debt beyond the levels which could be supported by income streams. The accumulation of debt became a big burden which has resulted in the crises which are being witnessed today. The crises in earlier periods were not widespread in the world and the restoring the stability was easier. But at this point in history, the crisis has affected most of the countries in the world and there is no immediate solution in sight to restore the growth. The adoption of classical economic theories will not solve the problems. We have to think differently and implement the necessary changes in the Global financial architecture. The solutions to the present day problems lie beyond the concepts covered in the economic theories available so far. There is a big change required in how countries are managed and enterprises are financed. We are in an evolutionary stage to address these problems.

Politics. The traditional thinking and old models favour a large majority single party democratic rule to run a stable economy. In the recent past ,we had witnessed different political systems delivering excellent results of performance. India with a system of democracy and with coalition rule was able to achieve an economic growth which had reached its peak. But it could not be sustained due to global crisis and internal crisis. China was able to develop a robust economic system with the communist party ruling. We witnessed good performances from some of the Arab countries like Saudi Arabia. Then we witnessed the revolutions in some of the Arab countries in the world. But one good development in politics today is that the politicians understand the power of good corporate sector and before the global crisis many of the countries in Africa were planning to create stock exchanges. The politicians today are well educated and they are able to appreciate the contribution of corporate sector to the economic development. This appreciation is leading to emergence of new concepts like  Public Private Partnership and opening many more sectors of the economy for private sector and FDI. Today bilateral relations are built on the foundation of commerce. Earlier the relations were based on security and political aspects. The need for good governance has been felt even amongst politicians. Despite lot of improvement in political system, there is still a need for new ways of managing politics and change in the governance models.

Society. There is a big transformation in the society. The rural areas are becoming semi urban , semi urban areas are becoming urban . There is a wide scarcity of municipal services in urban areas.  There is a movement away from joint family system to nuclear family system. Many in the family go to work and there are many multi income families. Jobs at entry level assure very high salaries.  The towns have people from various states and cultural backgrounds. The purchasing power of people is going up. There is a constant upward movement of people from lower income segment to higher income segments. More young people are waiting to join the ranks of the employed. Each country has its own issues. The average age of Japanese is very high and individuals in Japan, they have large savings. They do not want to spend the money. In USA, the savings of individuals are negligible , but they have huge borrowings and they want to spend. But they do not have the wherewithal to raise the resources to support the spending. India will have the largest number of people who will be very young in the working population but to make them productive a large scale vocational training is required to make them productive. In countries like Japan, crisis affected European countries and USA,  there is an immediate need for change in societal systems. The challenge today in US and Europe is to reduce the unemployment level and reduction of household debt. Lot of new ideas are required to implement the required changes.

Technology. The effect of technology in the last fifty years in our lives is profound and long lasting. Most of the changes we had witnessed in all these years in all spheres of life were catalysed by the changes in Technology. The latest to engage our attention is the communication technology which has become part and parcel of our life. In five years, we will witness a sea change in use of technology in our lives. There is a convergence of Technology, Media and Telecom which has impacted our lives the most. There is a widespread use of technology by government, corporates and individuals and it is difficult to think about our lives without use of technology. The change in technology has resulted in change in  business models of various industries.  The emergence of new communication technologies, bio technology and nano technology will redefine the way businesses are operated today. It has become necessary for companies to adopt the latest technologies to achieve a competitive advantage in their area of operations. The emergence of Digital media and social media are changing the paradigms of marketing.

Environment. The issue which engages most of the attention of Politicians and corporates is the preservation of environmental balance. When developed countries embarked on the journey of industrial development , the world had a good ecological balance and they were able to develop and run polluting industries. The effect of higher industrialisation had its toll on our environment. Now there is an organised movement across the world to preserve the environment. The new rules on emissions are acting as a constraint on countries like India where we are yet to realise the full potential of manufacturing. If we allow more industries , it is likely to increase the pollution levels and affect the ecological balance. If we do not develop industries, then we will lag behind in industrial and manufacturing development. Due to many environmental concerns the development of core industries like Coal, Power and mining are affected. There is a need to find immediate solutions so that the target set by government to achieve 25%  of GDP from  manufacturing could be met. New ideas are required to address these issues and management of these core sectors and environment requires  lot of changes.

Legal. India has one of the well defined legal systems in the world. The number of cases pending today in courts is very large  and  if average disposal of number of cases is taken into account, it would take twenty five years to clear these cases. The government has set a stretch target to dispose off many of these cases within five years. New ideas were discussed including , reduction of holidays for courts, working in double shifts, creating special purpose courts, etc. Many cases pending in Indian courts are trivial and these could be disposed off very fast. In the recent past, we witnessed some judgements on commercial matters which have made some of the profitable sectors in India unprofitable. In the last few years , few of the most profitable sectors have become unattractive today due to certain judgements. Few judgements resulted in discouraging the Foreign Direct Investment into India. Since the world has become more complex today, there is a need to develop simple and effective legal system to resolve cases in an expeditious manner. In commercial issues, there is also a need to take a techno-commercial-legal approach to solving the issues. 

There are many challenges as discussed and the present day challenges require new ideas , new thinking to address these issues. The change is required in many spheres of the economy. Many a times introducing change is difficult  and painful. Only by creation of innovative ideas the issues before hand could be addressed effectively. New thinking requires innovation and innovation has to be created as a culture and many organisations realised this need and in some of the developed countries , the departments are named as innovation departments and there is a position of  a Chief Innovation Officer.

Education institutions have a major role to play in fostering innovation and developing the attitudes for new thinking. Education holds the key to improving lives and reforming society. Education is a social process, and the most important process in determining the future of our country. The educational institutes should foster the culture of how to think. People must learn how to think well to achieve their dreams and to reach their potential.

Dear Students, while doing this course, you should develop your skills in thinking. I read recently that "the battle for control and leadership of the world has always been waged most effectively at the idea level. An idea, whether right or wrong, that captures the minds of a nation's youth will soon work its way into every area of society, especially in our multimedia age. Ideas determine consequences."

Your objective of doing this course should be to become great learners and great thinkers. Whatever new ideas come to your mind during an issue being discussed in the class room , please share your ideas in the class room. The starting point of developing your thinking skills is your class room. You can discuss the new ideas with your  Professors, Class mates and friends.

The country requires agents of change in all spheres. By developing the ability to think new, all of you can contribute to the development of a Viable economic system at the country level and development of viable business models at the business level. While doing that, you can create an opportunity for yourself for self development.

Dear Students, I have a great pleasure in wising you all , all the best for a productive time in SIES and encouraging you to learn more, think more and act to bring the required changes to  the benefit of every one in the society.

Thank you.