When Kris Gopalakrishnan describes the current state of the economy, he draws an analogy to another issue of global concern: climate change.
In the business world, the storm clouds of volatility have gathered during the past decade, and “the tsunamis and the hurricanes are getting stronger and stronger.”
Nonetheless, Gopalakrishnan — the chief executive officer of the highly respected Infosys Technologies — sees room for optimism, not to mention opportunity.
“When such changes happen, there is opportunity for wealth creation,” he told a packed auditorium of students as part of the W.L. Mellon Speaker Series. “Focus on sustainable innovation … sustainability of revenue is very important.”
Gopalakrishnan knows whereof he speaks. Infosys, an information technology powerhouse considered the gold standard of its industry, literally was founded in a basement in 1981 by a group of ambitious entrepreneurs.
Since that time, it has survived the Asian financial crisis, the bursting of the dot-com bubble, exchange rate fluctuations, capricious oil prices, and the collapse of key asset markets. Gopalakrishnan pegs business cycles as rising and falling every four to five years, and believes the latest crisis — which is nothing short of a global financial meltdown — will result in a significant demand for corporate accountability.
“If something happens in the company, it’s on the Internet in the next minute,” he says. “Responsible behavior will be expected, and this will only increase.”
Developing strong corporate values will help companies address short-term volatility while preparing for the long haul, Gopalakrishnan says. He also advises that companies manage big risks and not expect that regulation will fully solve that problem.
To take risk out of a company’s business model, he suggests building systems that practice core principles every day and monitor leading indicators. When those parameters are exceeded, management should find out who is responsible, he says.
Creating visibility within the value chain will help create agility within an organization, which is critical to surviving the soft economy, says Gopalakrishnan. He also suggests converting fixed costs to variable costs through such strategies as pay-as-you-go models and process outsourcing.
“When the path in front of you is straight, you accelerate,” he says. “Create the organizational capability to win in the turns.”
Trust will be a key factor in remaining competitive, he says: Trust between the company and its employees, who may fear layoffs, and trust between the company and its customers, who “are themselves in trouble,” he notes. That means there is no margin for error, and “every single project … will have to be done at the highest level of quality.”
The W.L. Mellon Speaker Series gives students the opportunity to engage in high-level exchanges about strategy, world affairs, and other key issues with CEOs and leading business executives. The series includes student-only breakout sessions to encourage discussion with speakers in small-group settings.
On a slide accompanying his talk, Gopalakrishnan summed up his advice:
“Business cycles are inevitable. Adaptability is the key to survival.”