AIMA convention on creative destruction

Kolkata: As survival of corporate houses becoming increasingly difficult in a fast-changing international business environment, more and more companies need to adopt the new mantra of ‘creative destruction.’

This new principle of survival in a competitive world will be discussed at the 29th National Management Convention, organised by the All-India Management Association in Kolkata on 14 September 2002.

Richard Foster, a director and partner with McKinsey & Co and the co-author of Creative Destruction: Why companies That Are Built to Last Underperform the Market and How to Successfully Transform Them, will speak about global lessons that need to be learnt on the concept of creative destruction.

Calcutta Management Association president Khokan Mookerji tells domain-b that only 18 of the Fortune 100 companies in 1917 continued to be in the list in 1987. Over 60 ceased to exist. In India, too, over 44 of the top 100 companies by market capitalisation in 1991 either ceased to exist or exited the top 100.

“Companies need to adopt a mindset that simultaneously focuses on creation (new growth options) and destruction (exit underperforming or unattractive businesses) as a means to increase shareholder returns,” Mookerji says.

The concept of creative destruction is a subset of the winner-takes-all trend that is dominating corporate equations the world over. Several powerful forces, such as reduction of tariff barriers, increasing importance of intangible assets, commoditisation of products and emergence of a winner-takes-all phenomenon are challenging traditional business wisdom.

The winner-takes-all phenomenon is resulting in the top three-to-five players capturing a disproportionate amount of shareholder value. This phenomenon has sweeping ramifications for leaders and followers alike.

In order to grapple with this trend and deliberate on how to address this tendency and look beyond liberalisation and reinvention of corporate strategy, the management convention has adopted the theme ‘Winning the New Future.’

The convention will have a galaxy of handpicked speakers both from home and abroad who would dwell on specific aspects to address the forces at work globally and in our country that will reconfigure our future.

The keynote address will be made by World Tel CEO Sam Pitroda, who was brought by Rajiv Gandhi in the late 1980s to head India’s various technology missions. The chief guest for the occasion will be West Bengal Chief Minister Buddhadeb Bhattacharjee. The convention’s theme address will be made by Tata Sons director J J Irani.

The second day of the convention will open with discussions on ‘New Paradigms for Success,’ where McKinsey India managing director Ranjit Pandit will share his views on the key forces at work. He will specifically talk about why the winner-takes-all phenomenon is emerging and what it will take to create these winners in future.

He will be followed by P M Sinha, a director on the boards of ICICI Bank, Wipro, Bharti Televentures and Lafarge India. He will focus on the changing Indian business landscape.

The second session, ‘Agriculture: Restructuring the Value Chain,’ will be addressed by ITC IBD CEO (agri-business) S Sivakumar and HLL ED (beverages) S Ravindranath.

The third session will deal with ‘Building World-Class Manufacturing Companies in India,’ and the speakers for this session include Hero Honda Motors MD Pawan Munjal, and Gujarat Ambuja Cements MD N S Sekhsaria.

The fourth session is devoted to the services sector with special focus on retailing and banking services.

Change in the corporate sector, says Mookerji, assumes importance in three contexts: global slowdown and downturn that has affected economies across the world including economic superpowers like the USA.

The 11 September 2001 attacks threw up a severe setback in business sentiment and affected the feel-good factor as far as economies, industries and companies are concerned.

The new-world economic order is unleashing several forces, as a result of which new trends are being set. Historical performance of companies does not guarantee success. “There is statistical and other evidence that the new phenomenon ‘Winner Takes All’ is emerging. However winning will be dependant on the ability of companies to grapple with discontinuity and reinvent themselves to reshape industries and markets,” says Mookerji.

Speakers at the convention will underscore the need for organisations to re-examine in depth their business portfolios. The sessions will be devoted to elaborating on the need to build a strong ethic that ensures effective implementation.

Speakers will also provide an insight into the real challenges involved in growing and developing a leadership talent pool, which will be required to handle the white heat of international competition.

Delegates will be privy to the presentation of international and domestic case and learning from successful companies that have addressed the challenges.