By Sanjiv Puri, Chairman, ITC Oct 15, 2020

The future belongs to enterprises that will constantly build responsible competitiveness with agility and resilience to respond speedily to external shocks and emerge even stronger from the crisis.

The ongoing COVID pandemic, a Black Swan event in recent history, is not merely a health crisis. It is an economic crisis as well which will have long term repercussions with multi-dimensional impacts on lives and livelihoods. With world GDP contraction and shrinkage in consumption, estimates say around 200 million jobs could be lost and close to 265 million people could potentially face serious hunger crisis. Accentuating the vulnerabilities of our society, the impact of this pandemic is going to take us back a couple of decades in our efforts to eradicate poverty and address social inequity.

But if you look back, even prior to COVID, the global economy had already been showing signs of slowing down with a muted rate of growth. According to the World Economic Outlook report published in October 2019[1], global growth was forecast at 3.0 percent for 2019, its lowest level since 2008–09, and a 0.3 percentage point downgrade from April 2019.

Compounding the situation, serious environmental degradation, depletion of natural resources, and global warming have been causing severe imbalances that are being manifested in extreme weather events. The world is actually on the throes of a serious sustainability crisis.

Earth’s overshoot day, the date that marks the day by when humanity ends up consuming all the natural resources that we are meant to consume during a full year, has been falling in July and advancing each year by a few days implying that we are exhausting all natural resources that the planet can provide us for one year in less than seven months. With the global population likely to grow from seven and a half billion to ten billion in the near future, do we have adequate resources to offer food security for the growing human race?

As these societal, ecological and economic crises stare us in the face, how can we reimagine the future and rebuild ourselves?

Every crisis is an opportunity - to think back, to rewire the thought process and strategy, and to co-create the future. A crisis can teach us to survive in ways we would not think possible otherwise.

These times present themselves as vital opportunities for corporates, as large economic organs of society, to be compassionate and to embed sustainability as part of their core strategy. If they look at this as an opportunity, they have the ability to unleash powerful forces of innovation, creativity, speed and collaboration that would help them pursue the triple bottom line of simultaneously creating economic, environmental and social capital.

Identifying themselves as a part of the larger social and economic ecosystem, there already are a few organisations, who have realised that social progress and profit are not mutually exclusive. Much before the present crisis hit us, these companies have been making significant progress on the triple bottom line agenda.

Reimagining the Corporate World

As we prepare for the next normal, we have to think about what we are going to focus on, and thrive? The answer lies in - agility, resilience and responsive competitiveness. At this point, these three mantras have taken centre stage and need greater emphasis.

Agility: If the current crisis has taught us anything, it is that the future is uncertain. Therefore, we need to build agile organisations which are designed for both stability and dynamism, with a network of teams that operates in rapid learning and fast decision cycles. Such organisations are quick in responding to changes in the marketplace or environment. An agile organisation is focused on its customers’ needs which call for customised rather than standardised offerings. An agile operating model has the ability to quickly and efficiently reconfigure strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities. So how do you demonstrate agility. First, by bringing in robustness in your ecosystem, wherein differentiated products and services can move from the drawing board to the market in record speed. Second, pivot yourselves to opportunities. Years will shrink to weeks sooner and hence agility will be required in a way that sustainability is embedded in strategy and action to make larger societal value creation an integral part of business outcomes. As the current crisis hit us, we at ITC set up a contingency fund of Rs 215 crores to address the needs of the distressed. To ensure liquidity in the hands of farmers, ITC’s procurement of agri produce was intensified. We worked with the government’s MGNREGA programme to create 7.6 lakh person days of work in just 45 days. Ramping up our capacity in safety and hygiene products such as sanitizers, overnight, perfume plants were converted to manufacture sanitization products. 40 different new COVID sensitive products were put out into the market.

Resilience: An organisation must emphasise on building resilience wherein the entire company functions as one whole unit- solving problems and working towards a brighter future. It is an ability that showcases how quickly an organisation can adapt to disruptions while maintaining continuous business operations and safeguarding people, assets and overall brand equity. To match the fluid business scenarios, there is a greater need to get a grip on your supply chains and then realigning them to react swiftly to interruptions. Be quick in forging partnerships and get the system up and running always in a way that extreme focus is provided to sweating assets and getting more out of less, and where dedicated talent is inspired by a larger sense of purpose.  For instance, way back in the 90s, India did not have access to fiber for paper. It used to be imported and we were cost uncompetitive.  Later when the import duties went down from 300 to 30%, everybody was in dread. That is when we reimagined and realigned our forces to create a competitive paperboard business and the idea of social and farm forestry was conceptualized. Through R&D, we developed fast growing saplings which could grow in four years and created a model where the farmers could have crops in between as well so they could get a source of income every year and every fourth year, money for the wood.  Today we have created 800 thousand acres of social and farm forestry which has further created 147-man days of employment. It has created for ITC, a sustainable and competitive source of fiber wherein the prices of this commodity will not fluctuate with currency or the global supply and demand. Thus, we could create a more resilient and yet an indigenous supply chain.

Responsible Competitiveness: In this fast-paced cutthroat world, you cannot take your eyes off competition. One has to invest in organisational vitality and responsible competitiveness. It is an essential ingredient for an effective market which lends forward looking corporate strategies, innovative public policies and a vibrant and an engaged civil society. It is about creating a new generation of profitable products and business processes underpinned by rules that support any society’s broader social, environmental and economic aims. Organisations will have to spot out creative opportunities in a competitive field.

  • Focus for the Future: Because the future has to be more sustainable, it has to be more inclusive.  The challenge is about creating the right business model and strategy, and this can be pursued synergistically. When your corporate objective is beyond shareholder value and is about societal value creation, you can reimagine strategies. Be creative enough to find solutions in a way that all this can be pursued simultaneously. In India, 50% of the workforce is employed in agriculture and our rural economy depends on agriculture. Agriculture is one area that is important for enterprises to focus on as we rebuild the future. If rural incomes were to improve then it can kick up a virtuous cycle of consumption, investment, employment, and growth.As companies transition to the new normal, here are five themes that have emerged as key factors that can help build momentum when it comes to reimagining an inclusive future:

  1. Innovation: One of the most critical factors for the future is innovation. One needs to plan the scenario in advance and look at options that could possibly emerge in future.  Be prepared on how you would deal with them and leverage some of the present trends. For instance, presently, there is a surge in demand for essential products for packaged foods. Ask yourself, is this going to sustain? Maybe the surge will not remain, but it is likely to settle at a higher level due to increased demand.  You need to keep your eyes on the prize. Keep your product development and supply chains geared up to deal with how situations would evolve. For example, at ITC as a part of our waste collection, all the low value plastics was going to a landfill. To minimise this, we developed a technology wherein this waste gets converted into granules which can be used to make items of mass consumption like containers and dust bins.

  2. Digitization: In the last few months, the quantum of adoption of digitization that we have seen is something that the world may not have seen in decades. There is an explosion of digital adoption. What is it that we need to do on that front? Fortunately, from ITC’s perspective, digitization has been in our DNA. The ITC e-choupal which is the world's largest rural digital infrastructure was conceptualized at a time when internet was not what it is today. Right from agriculture to manufacturing and logistics, our distribution is completely digital and digitally enabled. Even the union government have been pushing the envelope in this direction. Recently an app “Kisan rath” was created to enable farmers to be able to source crops. This is an area that is certainly going to influence the way business will be conducted in future and investments will be required.

  3. Sustainability: It is indeed possible to look at all the three aspects- environmental, social and economic impact capital, simultaneously, and create an enterprise that is extremely competitive. To manage our ever-increasing water consumption for various business processes, we have been investing in renewable energy and water productivity. We have been running a program, ‘Wellbeing out of waste’ in which we reach out to more than 1.2 crores citizens and teach them how to segregate waste collected and recycled. This way we were able to create a sustainable source of recycled waste as an input and our value chain remains far more resilient.  41% of ITC’s energy consumption is from renewable sources. All the ITC prefixed hotels are LEED Platinum certified. You can even create a community of skilled women self-help groups and connect them to relevant markets, so that they have a sustainable means of livelihoods.  One of the leading apparel brands FabIndia which has been around for over five decades now, has been contributing substantially in creating livelihoods and keeping alive the traditions, culture and craft of rural artisans. Pune based Earthy Companions Organic Farm (Eco Farm) is run by a marketing professional turned entrepreneur who quit his job to start his social entrepreneurial journey and follow his passion of becoming a farmer. The farm is committed to growing a wide variety of fresh organic produce while implementing sound, economically viable farming practices.

  4. Intellectual capital: Intellectual capital is a force multiplier and we have to build our future around it. You can make a shirt and sell it for a small amount to cover your cost, or you can give it to a brand owner who is able to market it for INR 4000-5000. This type of value addition in a way creates the surplus that comes back to be invested. As enterprises, we need to build for a better tomorrow by adding more value chains that are anchored on intellectual property or in the Indian context - Indian intellectual property.

  5. People: Talent will need more focus. There is a need for distributed leadership and entrepreneurship. Corporates need to define their talent culture, invest in people. It gives them a competitive advantage which can be leveraged to attract, retain, and promote leaders with the highest potential to drive businesses to success.

The Final Word

The future belongs to enterprises that will constantly build responsible competitiveness with agility and resilience to respond speedily to external shocks and emerge even stronger from the crisis.

It has been never more important than now not just for enterprises but for others as well in the society to be compassionate and embed sustainability in our actions and thought processes. That is the only way we will be able to build a future that is better. That is the only way we will be able to build a future that is secure and sustainable.

[1] https://www.imf.org/en/Publications/WEO/Issues/2019/10/01/world-economic-outlook-october-2019

Do you like the article?

Do you like the article?

Thank you

Sanjiv Puri, Chairman, ITC

12 Oct 2020