Fortune India 500 and the VUCA world

[For the entire Fortune India 500 list of India's largest corporations, click here]

The Coronavirus pandemic has shown how the world can change almost irreversibly in a span of just eight to nine months. As the pandemic gripped the world’s biggest economies, the impact on India too has turned out to be severe. The virus led to business models, strategies, and plans being rendered irrelevant overnight as it became clear that this was no ordinary disruption.

While some sectors took a bigger hit than others, there was hardly any segment of business which was not affected. And as the Indian economy—after the first two terrible quarters of FY21—begins clawing back, companies and their managements know that dealing with the VUCA (volatility, uncertainty, complexity, ambiguity) world will dominate strategic planning going forward.

This has been reinforced by the findings of the recently published KPMG in India 2020 CEO Outlook, where 100 CEOs from leading Indian business houses were interviewed, first in January 2020 and then again in August, to understand how their strategic priorities had changed. The results of the survey provide important pointers for the future. Several CEOs found purpose driven leadership to be the most effective way of meeting stakeholder needs. As many as 90% said their purpose dictated their approach to the pandemic, and one-third of them even had to re-evaluate their purpose as a result. Cost optimisation was another important element of the change in strategy post pandemic, together with a rethink on supply chains, enhancing ESG (environmental, social, and corporate governance) programmes, and aligning with new work realities. Another vital element was a very high emphasis on digital acceleration to make their organisations future ready. While 42% of the CEOs surveyed had faith in their company’s growth, this figure was a much higher 73% for CEOs from the infotech sector.

As many as one-third of the CEOs surveyed highlighted digital disruption as an imminent risk, a threefold increase from the number in the January survey. Similarly, between January and August 2020, there was a fivefold increase in the number of CEOs pointing to supply chain risks as a major threat, and 89% said they would continue to build on digital collaboration and communication tools to adapt to new work realities.

The 2020 Fortune India 500 list of India’s largest companies, which is out now, needs to be understood against the backdrop of these far-reaching changes which are taking place in India’s—and indeed the world’s—corporate landscape. While the list itself, drawn from FY20 numbers, does not tell us the story of how the Coronavirus pandemic impacted businesses, it does point to the various challenges companies had been facing even before the virus struck. Consequently, there is a 22% fall in cumulative profits of the 500 companies in the 2020 list. The impact of Covid-19 will be evident in next year’s listing.

In the VUCA world, even the largest companies will need to be nimble and adapt to sudden changes. The good news, as some of the stories in the Fortune India 500 issue will tell you, is that many companies have already recognised this new reality, and are in the process of reorienting their business models.

The world has changed forever.

[For the entire Fortune India 500 list of India's largest corporations, click here]