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: Vijay govindarajan :Professor at Tuck School of Business at Dartmouth College and Chief Innovation Consultant at General Electric
The year 2008 would have been called extraordinary if all that happened was that Bear Stearns went bankrupt. As it turned out the bankruptcy of Bear Stearns was just an appetizer and we had a whole slew of institutions get into phenomenal trouble.
Just imagine what all transpired. Freddie Mac and Fannie Mae went bankrupt. Lehman Brothers followed suit. There was almost a trillion dollars of bailout. The big three automakers joined the long list of companies that asked for government help. Just like SARs, the financial crisis spread from the US to Europe to emerging markets of India and China. Despite these setbacks, I feel very optimistic about our ability to rebound and get on to the path of economic progress. I certainly feel that India and other emerging markets can play an important leadership role in solving the global economic crisis. My advice to corporations is not to reduce their attention on innovation. In fact, the best time to invest in the future is during downturn. When the global economy is in recessionary mode, corporations can actually acquire assets at very cheap rates and build talent for a lot less amount of money.
CEOs of Indian companies must urgently recalibrate their strategy calculus around two priorities. First, they must take a zero-base approach to their current operations and see how to dramatically value engineer their costs. Second, they must evaluate all their growth and innovation projects, perhaps prune the innovation pipeline and protect high priority high payoff growth ideas. This is a time when leadership will be tested. Can Indian corporate leaders rise up to the challenge of creating the future while managing the present. I strongly urge Indian corporations to use 2009 as an opportunity to invest in assets and people so that they can benefit when the economy starts to improve in 2010.
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