There is a need for fresh ideas in today's competitive world, and new-age CEOs must think and act young, says Richard Rekhy, CEO, KPMG India
Image: Amit Verma
The role of a CEO has changed dramatically over time. Today, CEOs not only have to deliver market-beating performance every quarter but also fend off several challenges ranging from business model disruption, talent management and finicky customers apart from keeping pace with rapid technological changes. The 2016 edition of KPMG’s India CEO Outlook, an annual survey of Indian CEOs, has revealed that the competitive landscape of a business leader has only become more complex. Richard Rekhy, CEO, KPMG India, tells Forbes India how it’s about the survival of the fittest and why new CEOs need to be adaptable and have the ability to take risks. Edited excerpts: Q. About 46 percent of Indian CEOs that KPMG recently surveyed said their company will be a different entity in the next three years. What is driving this change?
Today, no CEO of a company—be it an internet-based or a brick-and-mortar operation—can say he can continue the same way. The business model is changing and there is a lot of disruption that’s happening. The new economy is a shared and digital one. Look at what Uber and Ola have done to cabs. There is going to be a blurring of sectors, the way we traditionally understand them. Is Flipkart a retail company, an IT firm or a logistics one? In this context, you cannot continue with the old business model, which has been successful so far. We are seeing large corporations that do not believe in this getting destroyed. For the first time, I can confidently say that this whole technology disruption is not only impacting blue-collared jobs but also white-collared ones. That is why CEOs are talking about transforming their businesses. The current business model is clearly getting challenged. Is it too inefficient, too costly? Everybody is asking us [KPMG] whether we can help them bring down the cost of customer acquisition and help retain customers.Q. Retaining customers has become a big challenge for CEOs. Has the marketplace changed so dramatically?
Yes. The new-age customer has no sense of brand loyalty. All that matters to him is the best price. Take airlines, for instance. He will choose an airline that offers the lowest fare as long as a basic level of service is guaranteed. With most new-age companies ensuring reasonable quality of the product or service, the customer is spoilt for choice. It is not surprising that 92 percent of the CEOs that we surveyed were concerned about customer loyalty. The companies have to relook at their costs. Productivity is critical here.Q. CEOs are resorting to automation to fight costs. Does that help when labour costs are relatively low in India? Is this contributing to jobless growth of the economy?
For large companies to survive globally, they need to automate. Only that helps them match costs. India has had the worst track record as far as GDP growth and creation of jobs is concerned. It is not a new trend; that’s been the case for 8-10 years. One way this can be reversed is by reviving the SME and MSME sectors. They are the largest job creators. Large companies do not create jobs. They prefer automation. We will need to create an ecosystem for SMEs and MSMEs to thrive. Q. Data analytics is another critical tool in the hands of a CEO to stay ahead of the curve, but there are challenges there. What is the way forward?
The challenge is the shortage of true data scientists. All the big data that is available with a company needs to be evaluated and the dots must be connected to make sense of it. That is where companies are lacking. They do not have the entire spectrum of skills to handle this. A mixed strategy can help. Companies can bridge the knowledge gap by reaching out to consulting firms who have the expertise, having already worked in similar industries. Many a times, the solution may lie outside the industry as well.Q. What are the major risks an Indian CEO faces in today’s environment?
In India, the number one risk is the geopolitical one. The fact that we sit in this hotbed surrounded by neighbours, all of whom seem to be fighting us, has not helped. The second major risk is cyber security. The moment you open up your system to third parties, you have opened it up to getting hacked. But only 17 percent of CEOs we surveyed said they were prepared for it. Rings and rings of security must be created. That will cost money, but it will save the company from a fiasco.
Q. What are the other risks?
Customer acquisition and retention, business model transformation, human talent attraction and retention are the other risks.Q. Under these circumstances, what should a new-age CEO be like?
People like me will become history (laughs). You are going to see the emergence of a young breed of CEOs who are flexible and agile, with the ability to manage change. They will also have the appetite to take risks. They will have to be technologically savvy. No more can a CEO rely entirely on his IT person. He must have a strong understanding of technology, its good sides and the downsides. Experience, of course, matters. But one can always get counsel from others. Q. How do existing CEOs adapt to this change?
Many of them are adaptable. It is the survival of the fittest. The professional life of a CEO is getting shorter. Today, 3-5 years is the period for which somebody remains a CEO. It is just not the quarter-to-quarter performance that is shortening their lifespan. There is a need for fresh ideas, energy and passion. Earlier, there was never this level of competition. You need to think and act young. You need to get into that mindset by engaging with youngsters all the time and understanding them. Bill Gates and Steve Jobs did just that.