Speaking at a plenary session on Preparing Corporates for the New Order, at the Indian Finance Forum, Palepu, who is also an advisor to Andhra Pradesh chief minister N Chandrababu Naidu, said the challenges to Indian companies will be from customers as well as shareholders who will demand value for their money.

With migration of capital being easier today, the investor is in a commanding position and the corporates will retain them only by paying higher dividends, he said. According to the management guru, who helped Andhra Pradesh in its Vision 2020 exercise, value creation is not just profit making and it is a multi-period concept. It calls for continuous information dissemination and executing the management decisions.

Thus the corporate governance would become a vital requirement for the company to be competitive in the changed environment, said Palepu. Effective execution will bring success to the corporate and it is possible only through proper coordination with the executives. The corporate strategy must be percolate down to the field staff who implement it.

Further there is a need for linking performance with the incentives to motivate the employee to perform optimum. Palepu stressed the need for the constitution of vibrant board rather than a rubber stamp. The board shall have people who can provide strategies to success.