A new race to evolve and thrive during COVID-19
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COVID-19 is having a profound impact globally. Not only is it affecting our health, but it is fundamentally challenging and altering our political, social, and economic norms. This unprecedented situation requires us all to take an exemplary approach to protect the most vulnerable people and do everything we can to limit the spread of the pandemic, whilst working, where possible, to mitigate the long-term economic impact.
There is a growing acceptance amongst the business community that we are slowly moving towards a ‘new normal’. Whilst the COVID-19 pandemic has fast turned this term into a modern cliché, it is also likely to be proved a truism.
Although the impact of the crisis, and this associated shift, will vary across country, industry, and organisation, we are seeing a distinct phasing of business and operational responses as we slowly make this transition. We call this ‘The Crisis Curve’.
The broad phases we see and anticipate are as follows:
Rapid crisis response
This is the phase immediately after initial World Health Organisation and Governmental interventions, where business priorities were as simple as keeping employees safe and ‘keeping the lights on’. This response has seen most businesses move to a home working model wherever possible, putting strain on IT, logistics, and operations. In the UK and other European countries, we are thankfully coming out of the shock of this initial phase.
Take back control
Many countries and businesses are currently at this phase, where Governments have started to move to more severe social distancing measures and initial phases of lockdown. At this point many sectors, such as hospitality and travel, start to be severely impacted. Other sectors, such as grocery and DIY are seeing significant growth in sales.
Regardless of the 'boom or bust' being experienced, almost all business operations are placed under significant stress as they try to adapt to employee sickness/self-isolation, ways of remote working, and changes in supply chain. Many are also experiencing an increase in ‘contact’ as anxious customers try to ascertain what these changes mean for them.
Business as unusual
Some countries and businesses have started to reach this stage. There is clarity and recognition that this situation is now only going to be resolved over the medium-to-long-term, with some form of lockdown continuing for weeks or months.
For some business models (particularly those built around costly fixed assets that are lying dormant) this point will prove catastrophic unless they have an exceptionally strong cash-based balance sheet.
Others will have been agile enough to pivot, finding new markets or rapidly developing new products/services that are relevant to society’s needs and challenges. At this point, new revenue streams start to become a medium-term reality. This means that the processes, people, technology and supporting functions need some additional thought and design.
In short – this is the point at which operating models start to permanently shift.
In the majority of organisations, leadership teams will need to recognise the requirement to optimise the performance of this current phase. This will mean restarting relevant transformation programmes as well as making targeted investments that will be relevant in the medium term.
It is critical to start to consider the transition to the new normal; capturing knowledge and data on where successes and failures have occurred during the crisis and preparing for the future.
Transition to new normal
We have all heard a great deal of speculation about a new normal, from an economic, business, and social perspective. From our own experiences with clients, we do not believe this will be a complete and total change, with nothing existing as we know it. In fact, history tells us that these scenarios are not usually as extreme as predicted; for example, following the 2008 Global Financial Crisis, many predicted that levels of consumer credit and borrowing would be much more cautious. That has proved not to be the case in many countries.
However, it is reasonable to assume that the depth and breadth of this pandemic will cause some fundamental shifts in the way we live and work. We have all seen the positive impact on the environment, and some of our clients have reported improved satisfaction and reduced attrition in operational teams, having adopted and optimised a working-from-home model.
Organisations will need to cut through the hype and start to anticipate what these shifts might be, how they may adapt to them or even influence them. By doing this, leadership teams can understand what the future blend should be between ‘pre-crisis’ ways of operating, and certain key elements of the ‘business-as-unusual’ phase. For instance, a business may ultimately reduce their estate footprint significantly and service more customers using a work-from-home model, but not at the 100% level that we have seen during the crisis.
For some businesses this critical restocking phase will be about strict financial management and controls to avoid insolvency. For others, it will be about whether their adjusted or ‘pivoted’ business model could, and should, withstand the transition.
Whether a company’s position is as extreme as either of the examples above, or more nuanced, all organisations of any scale are going to have to consider whether their current operating model is fit for purpose. Unfortunately, in the majority of cases the answer will be a resounding ‘no’.
We are also likely to see another period of significant investment in digital transformation as many businesses reflect that their operational exposure could have been limited if there had been latent capacity in digital channels and AI tools.
The final challenge will be the fact that this transition is likely to be slow and clumsy, so the transition to a new operating model needs to be considered carefully.
Certainly, we’re not expecting this phase anytime soon, particularly in European markets, but there will come a point where there is a clear exit strategy, and the economy will start to improve.
The senses of business leaders around the world are now heightened to the impact that a global crisis might bring. One thing COVID-19 has certainly exposed is the relative fragility of the economic system and the ability for many businesses to effectively respond.
As business models and operating models have evolved during this period, so will the need for revised scenario planning, business continuity plans and an investment in operational resilience.
This won’t mean merely preparing for another pandemic (although clearly that will be front of mind) it means considering all threats at both a holistic and a detailed level. For example, do I have the right quality and quantity of key technology and outsourcing partners in order to limit my risk and deliver effective contingency plans in the event of a cyber-attack?
In conclusion, this pandemic will be a challenging time for many organisations no matter what sector and what response they adopt. It is vitally important that we learn from the crisis, and also that we ensure steps taken now enable us to provide continued value to our customers, and employment for our colleagues; whilst paving the way for sustainable success in the future.
As David Turner, CEO of Webhelp UK, shared in his blog “It is now obvious that a seismic change is being experienced by our industry, the ramifications of which will be felt for years to come. This will alter the customer experience landscape forever, and we must be both responsible and responsive in meeting this challenge.”
In the coming months and years, I believe we will see a trend towards more resilient, efficient, agile operating models. Those organisations who can make this transition successfully, will be those who achieve sustainable, competitive advantage.
Certainly, a ‘new normal’ is coming and those that prepare now will be the best placed to thrive.