View: 12 lessons from polls 2024

Elections 2024 and formation of the third NDA government have several lessons in governance and strategy for corporate India.

1. It’s not lonely at the top

Competition is maximum among those who want to reach the top. Consequently, the market leader cannot afford to be complacent. Even companies that have been category leaders for decades must remain agile to protect and expand their turf. For example, Asian Paints has been facing competition from several players foraying into the paints sector.

2. Competition is good
Competition can be beneficial if a company’s management explores opportunities to cooperate with competitors to arrive at win-win solutions. For instance, domestic pharma companies compete with MNCs in India, but also collaborate with them to sell their in-licensed products.

3. Listen to feedback
Having one’s ears on the ground and paying heed to what your foot soldiers say will pay off much more than any third-party feedback. Employees working on the ground need to be empowered to share their discerning market insights, especially regarding rivals. Managers, in turn, must be trained to listen to those reporting to them to better shape the decision-making at the top.

4. Communication is key

One of the most clichéd words in corporate jargon is ‘communication’. But its importance is typically undermined. How effective are channels used to communicate to and from the organisational hierarchy? Do they weed out miscommunication, or encourage the grapevine to spread unsubstantiated information? How effective is the message the organisation’s top leadership give the world? How effectively is social media being leveraged?

5. Happy supply chain
It’s not just the company and its employees, but also its supply chain partners who must be able to participate in the company’s growth. The problem of a dissatisfied or unfairly treated supply chain becomes important when the product doesn’t function while in use, leading to complaining consumers. For instance, investigations have revealed serious production-control problems within Boeing’s supply chain operations. However, it’s ultimately airline companies and flyers who bore the brunt.

6. KYC
Knowing your consumer and her preferences is the key to getting the product-market fit, product pricing and packaging right. What works with urban consumers doesn’t necessarily work with rural ones, and what works for Gen Z doesn’t necessarily work for boomers.

7. Rockstar CEOs
High-performing CEOs are like a double-edged sword. While such CEOs become great taskmasters and drive high performance, their strengths tend to become weaknesses for their companies. Such CEOs may not allow other leaders in the organisation to grow or outshine them. This may also lead to the growth of a ‘yes-men’ culture and issues related to succession planning.

8. Outsiders as directors
Having outside experts join the board as independent directors strengthens the company’s governance standards, bringing more transparency, diversity, fresh thinking and work experience. It’s little wonder, then, that heterogenous boards tend to function better than homogenous ones.

9. Watch out for underdogs
Underdog companies (or startups) lack the resources to build solid brands and penetrate on a mass scale. However, if they offer the right value proposition for consumers, they find support among investors and other stakeholders.

10. Value for consumer
No matter how fancy or functional a product or service is, it must create value for the consumer — not just once or twice, but every time the consumer uses the product or service. And not just for a few, but for all consumers. A few dissatisfied consumers can easily threaten the goodwill generated by many satisfied consumers. For instance, while shopping online, one bad product review has a higher recall than 10 good reviews.

11. No view on markets
Irrespective of financial performance, a company’s management should refrain from presenting a view on stock valuations. Even if it goes down well with investors, it may not go down well with Sebi. Management can provide guidance on performance metrics and leave the job of market valuations to stock market pundits.

12. Consistency is key
At the end of the day — or year — stakeholders value consistency in performance, conduct and communication. If companies can consistently improve their business performance, investors reward them consistently on the bourses, and stakeholders reward them by support through economic cycles.

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