Geopolitical volatility, economic instability, mass layoffs, and increasing climate risks have set the tone for 2023, ensuring unwarranted disruption at every turn. Closer home, the picture remains more positive but it would be unfair to say that Indian businesses have had a smooth ride. Once only a threat, the funding crisis impacted a large chunk of the startup ecosystem resulting in layoffs. At the same time, CEO and executive turnovers reached record-breaking numbers this year. Amid all this, business leaders were also expected to respond to the mounting pressure on digitization. As we close the door on 2023, there is no better time than now to reflect on the past highs and lows and draw lessons that will help shape the future.

All Eyes on AI

In the evolving world of business, 2023 was a year when businesses and leaders witnessed some exciting and important developments. From major tech innovations to workplace changes — it was a year of great progress as well as continued unpredictability. On the tech front, the widespread rise of generative AI dominated all conversations. Large-scale breakthroughs in generative AI have the potential to bring about transformative changes to the global economy, in fact, over the next decade it could raise the global GDP by 7% according to Goldman Sachs. According to Gartner, generative AI will account for 10% of all data produced by 2025 — making 2024 a year of major growth. It is no surprise then that it has captured the attention of businesses across industries in the past year. Most leaders are aware of the criticality of future-proofing a business given today’s dynamic and disruptive environment; they also understand the role and impact of AI in enabling such transformation.

However, it’s not leaders alone who understand how vital AI is becoming to business and workforce success. In a PwC survey titled ‘India Workforce Hopes and Fears Survey 2023’, nearly 51% of Indian respondents believe that AI will increase their productivity at work compared with about 31% of global respondents, only if their organizations create and support upskilling opportunities. 62% of those surveyed said that the skills required to do their job will significantly evolve over the next five years; notably, 69% of Indian employees are also aware of how these requirements will change, compared to 43% globally.

Notice how these sentiments are in contrast with the underlying fears or uncertainties surrounding AI-triggered job losses. Taking on a more positive outlook than their global counterparts, the Indian workforce believes that AI will create more job opportunities for them (37%) and help them learn valuable future-ready skills (47%). These findings highlight the need for an urgent overhaul in how leaders approach upskilling and the overall growth of their employees. By integrating a skills-first approach, leaders should actively and thoughtfully promote a culture of learning in order to reap the benefits of AI. It is important to remember that the successful integration of AI and other emerging technologies involves aligning them seamlessly with an organization’s overarching goals and objectives. Leaders must seek to strike a balance between technology initiatives and broader business strategies to positively impact the organization.

The Sustainability Commitment

Achieving net-zero emissions by 2050 has been one of the biggest climate-action goals for businesses across sectors. However, the path to achieving it is a long, winding road. In 2023, we witnessed sustainability initiatives constantly being tested by persistent uncertainties. In the face of growing geopolitical tensions, economic instabilities, and macro shocks such as continuing inflation and supply chain disruptions, business leaders are struggling to make climate action a priority. Of course, one might argue that achieving the net zero goal was never going to be a linear journey and that setbacks are inevitable. However, I’m certain that the sheer intensity of these setbacks is unprecedented. The current pressures have many leaders conflicted between short-term business performance and long-term sustainability goals. As we step into a fresh year, it is clear that driving climate action is only going to get more complex.

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This volatile environment makes climate action and a strong commitment to sustainability even more urgent. Moving into 2024, I believe that leaders need to take decisive and bold steps, despite uncertainties. Investing in sustainable technology will be critical in this regard. As one of Gartner's top strategic technology trends for 2024, “sustainable technology is a framework of digital solutions that drive environmental, social, and governance (ESG) outcomes”. Gartner also predicts that by 2027, 25% of CIO’s compensation will be linked to their sustainable technology impact.

To move forward on the path to net zero, leaders must pay attention to their business’ energy supply and demand, responsibly leveraging technology and data to better understand their carbon impact and consequently, implement sustainable transitions. It is evident that business leaders will play a key role in shaping collective climate action but to do so successfully, they will have to build a set of strategic moves, whether it is in the form of investing in the right capabilities or the right technology.

The startup dilemma

Despite astounding growth and momentum in the last two years, 2023 has been a challenging year for Indian startups. Grappling with a funding slowdown, Indian startups witnessed a 65.8% drop in funding in terms of value between January and November 2023.

Since the onset of the funding winter in 2022, over 120 startups carried out mass layoffs impacting an estimated 34,785 employees — an unsurprising reaction to a year of cautious capital, rising interest rates, and growing uncertainty, globally.

While the numbers from 2023 might look bleak, I remain optimistic about the future of Indian startups. The challenging funding climate of this year has already sparked a shift in startups – a shift away from the ‘rapid growth at all costs’ mentality. ​​Entering 2024, we can expect founders to aggressively prioritize revenue generation, conserve capital, and build strong partnerships. However, it is worth mentioning that driving this shift will require strong, experienced leadership at the helm—leaders who demonstrate integrity and come with a solid understanding of governance. The latter, if we’ve learned anything from recent incidents of misgovernance in the startup ecosystem, is a critical foundation for long-term success. A robust governance policy and framework enables startups to attract investment, build trust with stakeholders, and most importantly, empower a culture of accountability and transparency. Good governance cannot be an afterthought. Rather, it needs to be at the center of the leadership/founding team’s ethos. Self-regulation, bringing experts on board, and building an ecosystem of trusted advisors and partners, will ensure startups don’t fall into traps of misgovernance. This can lead to a more efficient and effective business environment, with startups operating without unnecessary regulatory burdens.

Another strategy to mitigate the risks of a funding drought is to diversify funding sources. Startups can explore options like crowdsourcing, and government grants and form strategic alliances to strengthen financing and support for long-term growth. By identifying relevant industry players for collaboration, startups can tap into mutually beneficial opportunities, sharing resources, and customer networks, and boosting innovation.

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A notable bright spot amid the ongoing funding gloom is the advent of AI startups. In 2023, AI startups have successfully raised capital irrespective of the present market conditions, with funding for AI-related startups crossing $68.7 billion. At a time when boosting business efficiency and creating new market opportunities are critical, leveraging new tech like generative AI, for instance, can help startups stay ahead of the curve.

Onward and Upward

India aims to be an advanced economy by 2047 with the IMF projecting India to become the third-largest economy in the world by 2027, with a GDP of over $5 trillion. In many ways, we are on the cusp of a new era - one that is shaped by our collective resilience. The challenges of the past year have not dimmed our aspirations. And we are entering 2024 with this determined spirit. No doubt, a sea of uncertainties lies ahead of us, whether it is the national or US elections in 2024, the rising humanitarian crises fueled by geopolitical forces, or the unexplored impact of AI on business and workplace dynamics. It is times like this that call for a new kind of leadership. In the coming year, I expect transformation to be woven into the fabric of leadership, whether it is by leveraging technology, building and leading with trust & transparency or striking a balance between seeking accountability and displaying empathy.

As we leave 2023 behind, I would not only like to wish you all a promising and fulfilling new year but also look forward to hearing your thoughts on the challenges and opportunities that lie ahead.

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