Let’s see some of the developments in the Indian Industries with respect to economic and productivity point of view. For any economy in the world, the macroeconomic indicators include Index of Industrial Production, Consumer Price Inflation Rate, and Export-Import data.
Some Industry Developments: Between 2017 and 2019, Indian car market has grown 12% to 16% per year. As on July 2018, Indian hospitality sector has 65% room occupancy rate with slight price hikes. In the area of online platforms, ProSolv 360 is an online dispute management platform over the cloud, which will resolve civil and commercial disputes outside the court.
Now let’s know how do we measure return on R & D investments? The return on R & D investments can be measured based on the value being created to the customer. In case of manufacturing sector, the effectiveness of manufacturing largely depends on the volatility in input costs.
Hiring CEOs in 21st Century: The average CEO tenure in Standard & Poor’s (S&P) 500 organizations, is nearly 10 years. Private Equity (PE) firms after investing in companies, almost replace the CEO. They hire multiple CEOs every year. Some important aspects are:
- PE firms identify several CEO moves, identify the patterns and can effectively evaluate the fitment of CEOs to different stages of an organizational life cycle.
- In case of public limited companies, company directors get a chance to recruit the CEO.
- The Economic Philosophy and the Process is different in hiring CEOs by PE firms, and public limited companies.
- The current day CEOs should be able to effectively assess between:
“Cost Cuttings Vs. Product Innovation Vs. Business Model Changes”
- One of the key skills of CEO is the ability to assemble high performance teams.
- CEO should balance between risks and uncertainties.
- Learning new products is required for CEOs for better decision making.
- Private Equity firms look for CEOs bounce back approaches such as facing setbacks, made errors, recovered, and yet lived another day.
- PE firms coach the small teams, and enable owners to create value to customers.
P2P (Peer-to-Peer) Lending Industry: FinTech (Financial Technology) firms are providing alternative credit with peer-to-peer lending platforms. Globally, FinTech based P2P financing market is worth $500 billion. Some of the FinTech startups such as Faircent, LenDenClub, etc. are providing peer to peer (P2P) lending services. Even RBI (Reserve Bank of India) has released regulatory framework for P2P lending platforms recently.
Dairy Farm Industry: This traditional Industry observed that productivity is low in organic milk market. Hence, if we acquire more customers, serving them would be more difficult. In the dairy farm industry, one needs to wait for 6 or more years patiently to see the Return on Investment (RoI). They need to have deep pockets apart from having interest in dairy farming. In this industry, it is very common to loose an existing customer, while we are adding new customers. Venture capital (VC) firms and angel investors are eyeing towards organic milk industry for making long term investments.
So far, we discussed some of the industry developments, key aspects in hiring CEOs, P2P lending industry and learnings from dairy farm industry in India.
Happy Reading…..
Dr.Goparaju Purna Sudhakar