Business
highway is a theoretical concept of businesses traveling over time towards
their destinations on certain pathways. While each company has its own goals,
more often than not several companies, constituting an industry, tend to travel
together along the same business highway. The reasons are simple: every company
in an industry faces the same huge market that appears bountiful on the distant
horizon and every company has only a defined set of prime movers to take them
towards the destination. The nuances we speak of in terms of product
positioning, market segmentation and so on are efforts to define motels and
hotels on the highway to rest in the quest for market dominance. Those who take
their rest as the endpoint in journey risk becoming marginal players in a
subset of the large market.
When a company
starts as a monopoly, the cruise seems to be smooth and unchallenged. Companies
take their time to build up speed, and after certain periods of acceleration
and deceleration, could stay on their chosen speed level. In certain industrial situations of perfect
duopoly, two players tend to travel together in a certain equilibrium without upsetting
each other unduly. In most industrial situations, however, competition starts
coming up. Dots in the rear view mirror become, new speeding competitive
businesses zipping past the monopoly or the duopoly businesses. Academic gurus
and practical leaders dedicate their lifetime understanding the dynamics of
competition and developing constructs to stay ahead of competition. The fallacy
in competitive strategy is that everyone has the same access to theories of
competitive strategy and can operate in similar ways to meet their strategic
objectives. Much like automobiles, businesses drive through rear view and front
view.
Rear view
The essence of
rear view in driving is to be watchful about vehicles overtaking us. The rear
view strategy in business also works much the same way. As in safe driving, it
requires the driver to focus largely on the way ahead while casting darting
glances at the rear view mirrors. Each car has two rear view mirrors; the right
one near the driver (in right hand drive vehicles) is the primary one to be
watchful about overtaking vehicles (competitors, in a business context). The left
side rear view mirror is helpful to be watchful of those who seek to overtake
from the wrong lane and also help the driver assess how he is pulling ahead of
competition as he overtakes. To make effective use of the rear view mirrors and
not to be blind to relative speeds, it is important, without doubt, for the
driver not to have glaucoma (and for businessmen not to have tunnel vision).
The highway
cruise is a game of lead and lag. Over time, drivers in autobahns learn to
maintain a distance in equilibrium or get used to an iterative lead and lag in
disciplined lanes. They also confirm to lane discipline, by and large. While
the destination remains the goal, the preoccupation of the driver’s mind is in
preserving a competitive but collectively safe ecosystem. The leads and lags do
help in arriving at the goals but miss the larger picture of if one is on the
right lane. In business too, when one is preoccupied with competitive leads and
lags, the businessmen tend to lose track of the broader picture. Much attention
is paid on watching the rear view to take care of the zooming competition, and
ensuring the lead. Business race is not one in which a few market share points
matter (as seconds matter in a car race). What matters more is an unfettered
view of the spaces ahead for businesses to continue racing ahead.
Front view
It goes without
saying that the front view is far more critical than rear view in driving. The purpose
of front view is to seek a clear road, be mindful of signages, and avoid safety
risks. In business too, front view ride is critical but cannot be curtailed
like in road cruise. It is important to look far ahead and visualize the path. Verdant
spaces to drive in are important. The trap, however, is that business
managements very quickly convert the long term visions (strategies) into short
run journeys (budgets), and become watchful drivers. Agility, if at all, is
shown in overtaking the vehicle (business) in front rather than in considering
a quantum jump to a distant destination. As with rear view, soon the drivers in
front view too get into a comfortable equilibrium with the road ecosystem.
Many times, the
best of views is disrupted by inclement environment; while the vehicle or
business may have the best of navigation aids, prudence demands slowing down
till the weather clears up. A road warrior understands the physical limitations
of an inclement environment but a business warrior takes really a long time to
feel the impact. All of these do not matter as much in a crowded bumper to
bumper traffic condition or in a fragmented industry environment because speed
is controlled by default. That said, it would be somewhat facile to assume that
a leader who is well tuned to disciplined yet agile driving on the road would
be equally so in a business highway. On the contrary, there are critical
differences in how leaders conduct themselves in the two bahns of roads and
businesses.
Two bahns
While both automobile
travels and business travels are physical, the latter gives a vicarious feeling
of virtual state. As a result, the business leaders who drive on the business
highway tend to be far more freewheeling than the driver on autobahn. The results
in an autobahn are instantaneous and physically experienced, whether positive
or negative. In business bahn, however, the results take time to deliver and
the careless driver is insulated from the likely impact. This fundamental
difference makes well-groomed and disciplined leaders to be casual, careless and
even undisciplined on a business bahn. Leaders who would be deeply aghast at
liberties taken in physical driving would not only wink at liberties taken
nonchalantly on business bahn but also be unmindful of the damage being
inflicted on the business ecosystem. Leadership exhortations such as ‘making
one’s own path’ can be easily twisted out of perspective to go berserk on business
highway. Unfortunately, the impact of reckless driving on business highways
gets known only after the drive is nearing to a serious crash.
A vehicle needs
fuel to cruise on the autobahn. The faster you drive and the longer you drive
the greater is the fuel consumption. The best bet lies in having a vehicle with
a larger fuel tank and better fuel consumption; such an envelope only postpones
the limitations but never eliminates them or avoids the need for refuelling. Like
automobiles, businesses need the fuel of profits to run; so does everyone
believe. In reality, businesses need cash to run. Profits are virtual fuel, an
accounting fuel in a manner of speaking, that lets businesses keep on running
despite losses (and even cash losses) through a variety of props of diverse
financial instruments. It is important that businesses appreciate the
importance of cash as the only fuel that can sustain deviant or careless drive
on business highway. The processes of management have put in place a number of
checks to ensure appropriate governance (much like speed governors, ABS and
safety checks) but the way bankruptcies and stressed assets blow up in India
and elsewhere indicate that the drives on business highways need a different
perspective for future.
Autonomous driving
The automobile
industry, nay the road transportation sector, is set to be transformed with the
experimentation and eventual maturation of autonomous driving. An autonomous
car (also driverless car, self-driving car or robotic car) is a vehicle that is
capable of sensing its environment and navigating without human input. Autonomous vehicles detect the surroundings
through radar, lidar, GPS, odometry, computer vision and soon with artificial
intelligence. They are equipped with advanced systems that interpret sensory
information (including reading signages) and navigate the paths towards
destinations, overcoming obstacles. What this implies is that man-machine
interface through breaking systems, speed governors and safety devices is considered
inferior to a completely machine controlled drive. Autonomous driving is both a
tantalizing misnomer and a perfect descriptor, in parts. Conceptually, giving
an automobile complete autonomy from the free thinking human being is
considered to lead to better navigation, safety and efficiency for the vehicle
and its passengers (besides accommodating one additional person in place of the
driver)!
Well for
businesses too, all the wisdom from the stakeholders to advocate prudential
norms and all the efforts from the regulators to put in place governance
standards are akin to the meters and governors, with all their bells and
whistles, embedded by the designers to enable smooth and safe functioning of an
automobile in the hands of its driver. Just as these have been found wanting
and autonomous driving is the new goal for safe autobahns it appears that businesses
that are algorithmically driven and are autonomous from the inducements,
aberrations and compulsions of human enterprise could be the new norm for safe
driving on business bahns. Conceptually, a machine controlled business would appear
to be completely antithetical to the idea of free enterprise but with the
strides being made in artificial intelligence businesses may be run faster and safer
as well as more profitably and more prudentially by machine controlled
algorithms! The advantages could lie in terms of better regulated investments
and expenditures with greater business assurance!!
Posted by Dr CB
Rao on June 3, 2016
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