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Leadership In the Age of Scarcity - The Conversation

8:30 AM Friday June 18, 2010

by Navi Radjou, Jaideep Prabhu, Prasad Kaipa, Simone Ahuja | Comments (18)

Based on a survey with over 3600 graduate and undergraduate students worldwide, IBM's recently released Global Student Study

2010 compares side by side the value system, mindset, and management style of future leaders with those of current generation

CEOs. The findings supplement insights from their 2010 CEO Study, which we discussed in our last blog post.

If you are leading a function or a business unit, you should read carefully what these students have to say. Why? Because they

represent the Millennials, aka Generation Y, who will soon swell the ranks of your employees and customers. To cultivate long-

standing relationships with Gen Y, both as employees and consumers, you must ensure your own attitudes, behaviors, and more

importantly, your expectations are aligned with theirs.

Sadly for senior managers, the student study reveals a big discrepancy between these future leaders' view of the world and that of 

present CEOs. Indeed, twice as many students as CEOs say that "globalization" and "environmental issues," as they converge,

will have a significant impact on or ganizations of the future. In particular, those students who believe that economic power is

shifting from developed to emerging economies are much more likely to expect a major impact of sustainability issues.

These future leaders view sustainability as a globally-interconnected phenomenon. For them, the rapid growth in emerging

nations like India and China and continued high consumption in developed countries will soon deplete natural resources like water 

and energy, creating global resource scarcity. Interestingly, while 65% of students believe that scarcity of resources will

significantly impact organizations in coming years, only 29% of current CEOs believe so. In North America, students are

three times as likely as CEOs to believe this.

This huge inter-generational divergence is worrisome and should be swiftly addressed. As we wrote in a prior post, the Western

world is inexorably shifting from the Age of Abundance to the Age of Scarcity (or the " Age of Austerity" as Britain's Prime Minister 

David Cameron puts it). To win in an increasingly resource-constrained world, firms must embrace a sustainable growth

strategy we call More for Less for More, which delivers more experiential value to more people for less economic and

environmental cost.

Unfortunately, 71% of CEOs worldwide who are unworried about scarcity seem to adhere to the old "more for more" paradigm,

i.e., charging customers more money for more resource-consuming products and services. But this anachronistic model is

doomed to fail as frugal and eco-friendly consumers and the value-conscious Generation Y employees eschew "more for more"-

minded firms in favor of companies which embody the more for less for more principle.

If you are the head of a department or line of business reporting to one of these 71% of CEOs, what can you do? Help your CEO

identify scarcity-busting strategies and business models that deliver affordable and sustainable innovation for more

people at less cost.

Say, for instance, you work for a pharmaceutical company. The current "more for more" drug development model — investing

billions of R&D dollars to develop an elusive blockbuster that costs patients a fortune — is no longer sustainable, as capital gets

scarce and Obama's healthcare reform starts to unfold. A better approach would be to practice collaborative innovation. For 

example, Amylin, a San Diego-based diabetes research company, came up with a promising new molecule but could not make it

commercially affordable. So it partnered with Bangalore-based Biocon, which found a way to express that molecule in the host

system and reduced the development cost ten-fold, making it financially viable. Why not propose to your own CEO similar win-win

partnership strategies that pool scarce resources worldwide to deliver more value for less cost for more customers globally?

But ultimately, as a senior manager, you need to lead by example by inculcating the more for less for more principle

within your own department. For instance:

R&D heads should adopt the "design-for-scarcity" principle. CTOs and R&D heads should move away from over-

engineering "perfect products" and towards improvising "good enough" solutions. Several good examples of "good enough"

solutions come from Western companies that have leveraged teams in emerging markets to produce frugal, functionally-

relevant solutions. For instance, GE Healthcare has invented MAC 400, a portable CT scanner with super-long battery life

while Nokia's 1100 model, with an integrated torch, is a runaway best seller in electricity-deprived India and Africa.

VPs of marketing should engage consumers in the sustainability dialogue. The explosion of social media has given

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rise to well-informed and vocal consumer communities that often operate autonomously of the brands they engage with.

These frugal and environmentally-conscious consumers — especially of the Gen Y type — can help build brands they

favor, but also cause the demise of brands they fall out with. Proactively engaging with them in a deep way on sustainability

issues like resource scarcity can help companies shape their own strategies as well as differentiate themselves from

competitors. This is precisely what two companies we have studied — YES Bank and PepsiCo India — have been doing in

the areas of financial inclusion and water usage respectively.

Creative leadership is about proactively driving change in an organization before change is imposed upon you. As a senior manager, you must lead your firm's implementation of the more for less for more model well before frugal and eco-conscious Gen

Y workers and consumers force you to do so.

Navi Radjou is Executive Director of the Centre for India & Global Business (CIGB) at Judge Business School at the University of 

Cambridge where Dr. Jaideep Prabhu is the Jawaharlal Nehru Professor of Indian Business and Enterprise. Dr. Prasad Kaipa is a

CEO Coach and head of Kaipa Group; he has worked with over 100 CXOs and 30 Fortune 500 companies in the areas of 

innovation and leadership. Dr. Simone Ahuja is the founder of Blood Orange Media and Advisor to CIGB.