10 key challenges for an MBA CEO of today

Over the weekend I was invited to address the final year MBA graduates of a premier university in Sri Lanka, the Colombo University, at their residential workshop. The topic was ‘Key Challenges of Sri Lanka for a Young CEO and Their Role Today’.

Let me share the 10 key points discussed given that the university attracts the top talent from the business world in a given year and there is diversity in their experience as they hail from different sectors.

1) Learning will not end at MBA

When one enters an MBA there is so much of enthusiasm and pride but when one comes to the end of the programme the only thought is about when one can complete the dissertation and graduate. The logic being balancing studies, family, work, industry get-togethers and looking after one’s health is an absolutely horrendous task, especially in today’s working environment where there are protest campaigns that affect travelling on a daily basis. 

But the reality is that in today’s dynamic environment, the only way to survive is to be switched on to the latest ‘best practices’ continuously. This means that the MBA learning ethos will have to be engraved in our daily lives even after graduating. My view is that the Daily FT gives a good balanced view of the changing environment and its best practices but it will be useful to select some online updates that can raise the flag. I use the Harvard internal newsletter but I also find CNN Board Room, HBR and Economist also give a good perspective. The SC Nielsen quarterly update is a good analysis on the Sri Lankan economy whilst lately the Central Bank weekly economic update also gives a strong view.

2) Consumer pressure 

on the purse high

The last two weeks’ economic updates by the Central Bank have continuously highlighted the upward trend on the weekly commodity prices be it rice, lentils, sugar, sprats, cowpea or canned fish. The logic being that when the exchange rate is under pressure then there is no option but costs increasing.

March inflation hit an increase of 7.3% with core inflation also increasing by 7.3% vs. 7.1 in February which is not healthy. If one understands the typical progression of consumer behaviour, the use of items like shampoos, sanitary napkins for instance is linked to the quality of life of citizen and if one is reducing the frequency of use or moving out of the category like what is happening now in Sri Lanka are strong vibes of an economy heading for trouble times.

Given this background, one will have to find creative ways of adding value to a customer so that business volumes can be achieved. On a separate note one will have to continuously change the product portfolio of a company so that one can ensure that a company’s product is included to the consumer basket.

3) Handling public sector corruption

In today’s world, a public sector organisation has three economies at play. The business economy, political economy and the corruption economy. Many of us thought that with the Yahapalana Government there will be more focus on the business economy with the corruption economy being non-existent, however the reality is that the lines are more blurred and the private sector is grappling to understand how to work with the public sector. 

In the next one year the skew will only increase given the local government elections that are scheduled later during the year. My advice was very single-minded. Play the game absolutely straight unless one wants to end up giving evidence at FCID, Presidential Commission or the Bribery Unit which are not pleasant experiences as is the general ethos.

4) Do not use the media to talk to Government

A key pick up from the apparel, IT/BPO industry and mobile sectors are that the private sector does not use the media to communicate policy issues of industry anomalies. They ensure that the industry gets together even with the cut-throat competition that exists in the marketplace and cohesively meets the public sector technocrats and thereafter the political hierarchy so that any issue does not become a political weapon in a Coalition Government. This also requires the new skill of engaging the public sector on a continuous basis and influencing policy reforms. 

5) Tourism needs a positioning strategy 

Focusing on the key strategic sectors I first focused on the tourism industry. This industry strongly require a positing strategy, which has been the call of the private sector for the last decade. Fortunately the segmentation and targeting is clear but for some reason positing the industry to compete with the likes of other island destinations like Maldives, Seychelles or Mauritius leaving aside Malaysia, Thailand or Singapore has not achieved much success. 

Once again the way out is not to enter a political war on the media but supporting the public sector using the World Bank and such organisations like McKenzie which is acting as the catalyst for making this happen with a strong marketing campaign. But a word of caution is that private sector must not be involved in the corruption economy at any cost which is why this project has not moved in the last 10 years.

6) Exports need innovation

Latest research from the Harvard Development Centre on Sri Lanka has revealed that the export industry has launched only seven new product categories globally in the last 15 years (2000-2015 time period) which is the reason for Sri Lanka exports to be registering just 10.3 billion dollars recording a -2.2% performance in 2016.

Apparently, more aggressive countries like Thailand has launched as much as 70 new products generating $21.6 billion dollars into the country whilst more aggressive countries like China has launched 76 new products, generating a straddling $331.6 billion dollars by way of export revenue which tells us the challenge that countries like Sri Lanka must address even though the World Bank ranks Sri Lanka as the best performing in the ‘Doing Business’ ranking for South Asia. This must be addressed by the new age CEO was my view in the years to come linking closely to the university system of Sri Lanka.

7) Sri Lanka will be freer

The latest research by the Heritage Foundation and Dow Jones and Company state that Sri Lanka’s economic freedom is registering 59.9 which in comparison to the global average is termed ‘mostly unfree’ as per the 2016 Economic Freedom indicator. What needs to be noted is that from the repressed situation in 2015, the 2016 Sri Lanka performance is in the correction direction and hopefully by 2017 we can move to a rating of 70 which is essentially ‘Free’. This will support the GSP stipulations and also drive further integration with world economies. This means that the CEO of tomorrow will have to keep a close watch on the opportunities globally by being close to the policymakers.

8) Top 3 national issues

AC Nielsen research report states that the top three issues of the country are the economy, politics and corruption. If we examine what ails the economy of the country similar to the last 10 years there are many factors that will emerge such as shrinking global markets, debt payment issues, etc. But the issues faced politically are very worrying given that on a daily basis there are protest campaigns which is in essence the agitation of the different segments of people.

Many thought that the Yahapalanaya promise would eradicate corruption but as I said sadly the breadth and scope has only increased; I guess in the next nine months it will only increase further, given the provincial government elections being planned. This also inhibits private sector participation with the public sector which the new age CEO must monitor before stepping into public sector boards.

9) Top 3 consumer issues

From a consumer point of view the key three issues are political stability, increasing utility bills and increasing costs of children’s education. Sadly one cannot see a breakthrough on these fronts given that according to last week’s Central Bank Economic Report, the Colombo Consumer Price Index increased to 6.8% from the 5.5% in January 2017 vs last year which means that the cost of the basket of goods is increasing. 

Annual average inflation increased 4.6% in February 2017 from the 4.3% registered in 2017. The CCPI core inflation that reflects the underlying inflation in the economy increased 7.1% in February 2017 from the 7% in January which means it’s on an upward trend which is worrying. The annual average CCPI core inflation increased to 5% in February 2017 from the 4.7% in January which reflects the heart of the problem to a typical household of Sri Lanka which needs the attention of the young CEO of today and how creatively demand can be managed.

10) SL brand will be 

$ 100 billion

The good news is that Sri Lanka as a nation brand will become 100 billion this year with the above performance of Economic Freedom touching 70 hopefully. The challenge is if the election agenda will hamper this performance in 2017 and 2018 but the GDP also touching 100 billion dollars means that Sri Lanka can attract better quality tourists and better quality export markets whilst FDI will also get directed to Sri Lanka. 

Way forward

There can be many more challenges for the new age CEO after passing out of the MBA that includes higher taxes at corporate level and cost of capital increasing and the continuous change in policies that is a nightmare to the business world. But the real challenge is how a typical MBA programme can churn out a graduate who can make a difference to Sri Lanka.

(The author is an award winning marketer by profession and served 17 years in top British and American multinationals in brand marketing and general management whilst he has the unique experience of serving the public sector as Chairman of three public institutions in exports, tourism and retail chain and the international public sector via the United Nations for five years.)