- Companies which have gone digital are adapting to the crisis better than their peers.
- Business leaders need to devise a lockdown exit strategy.
- We should continue to use technology to augment, not replace, people.
- Companies should embrace the cultural and behavioural shifts that COVID-19 introduced.
Business leaders today are rightly focused on the huge business continuity challenges posed by COVID-19. First and foremost they must ensure that employees are as safe as possible, securing financial sustainability, assessing the resilience of supply chains and reinforcing crucial systems to support unprecedented levels of remote working and online trading – while withstanding an upsurge in cyberattacks.
Unsurprisingly, the organizations that were furthest down the digital transformation journey before COVID-19 struck are tending to adapt to the crisis better than their peers. Their business models and working processes meant that they were able to pivot more rapidly or accelerate changes already underway. The businesses that lack a robust digital backbone or an online presence have struggled, as have those exposed to high street retail, transportation, energy and tourism sectors. Meanwhile, software companies providing collaboration tools, software-as-a-service and cloud capacity are seeing high levels of demand to meet rapidly changing customer and business behaviour.
However, businesses, no matter how digitalized, need to try and look beyond the immediate business continuity or liquidity issues caused by the pandemic. As more focus turns to the loosening of restrictions in place by governments, we should all be thinking about what the future may look like. What lessons should we take from this pandemic to prepare for the “new normal” following COVID-19? How can we enable our organizations to thrive in a post-crisis world?
Perhaps we can start by thinking about these four things:
1. Devise a lockdown exit strategy
Many national economies are experiencing large drops in GDP. Hence, governments are thinking seriously about lockdown exit strategies that will allow them to reboot economies while minimizing the threat to human lives. Similarly, businesses will need to figure out how they restart their operations while continuing to prioritize the wellbeing of their staff and dealing with the aftermath of lockdown and its immediate implications.
This will require them to consider if and how staff return to offices or visit customer sites – while maintaining social distancing protocols. Few businesses, if any, will return to the same working and customer service practices they enjoyed only six months ago, with short-term impacts to productivity, costs and employee morale. They may need to introduce greater agility and flexibility into their supply chain so that they can switch to new suppliers if necessary.
2. Consider the changing role of the state
The crisis has had the effect of dramatically expanding the state in many markets as governments have implemented strict rules to save lives and unveiled massive stimulus packages to save jobs and businesses. These measures have come at a huge economic and social cost, which is why many governments will be focused on ensuring that their countries won’t have to shut down to the same extent should another pandemic strike again in future. Following the financial crisis 10 years ago, governments around the world introduced more than 15,000 pieces of new legislation to strengthen the global financial system. You need to think about how new regulation may impact your organization’s business model and factor that into your strategy going forward.
Rather than invite a coordinated global response, the common threat of the pandemic has created more division and, in some cases, intensified competition. Going forward, we are likely to see greater regulation – potentially in areas such as employment rights, accessibility of data and the cash and liquidity buffers held by large businesses. We will likely see a rapid acceleration towards “e-government”, the digitization of healthcare and role of state in its universal provision.
With the dramatic fiscal intervention by the state in supporting impacted workers and businesses, it seems inevitable that we will see short-term nationalization in some industries as well as direct state intervention in newly designated industries of strategic importance. We should also prepare for changes to the taxation system as governments look to recoup some of their recent outlay and rebalance the books in the medium-term.
3. Use technology to augment, not replace, people
Technology has enabled us to rethink the ways in which we perform fundamental activities during this crisis. Stock exchanges are still operating even though their physical trading floors are closed. The UK has established a virtual Parliament. Contact centres around the world are switching to remote ways of working, with some making use of artificial intelligence to maintain expected levels of customer service. While we have long had a strong culture of flexibility and remote working at EY, we flexed further and have over 300,000 people across 150 countries working from home.
These developments are impressive, but many of the technologies and tools in which we are all having a crash course in – such as Microsoft Teams or Zoom – have the ability to enable us to do far more. Many businesses’ default positions are to use technology to replace, rather than to integrate with the workforce. This period is an opportunity for business leaders to explore how we can make greater use of technology to augment people so that we achieve productivity gains, improve the working lives of our employees, deliver better products and services to our customers and help drive higher economic growth.
4. Embrace the cultural and behavioural shifts that COVID-19 introduced
For many, the global pandemic exposed weaknesses and rendered many traditional strengths irrelevant. Technology has been the common denominator for most organizations’ resilience amid the crisis. It has also helped drive significant cultural shifts – such as people working from home and connecting with colleagues via video-conferencing platforms and collaboration tools.
While online sales and services were already growing rapidly in many countries, the pandemic has catapulted online retail into overdrive. More than just food and home remedies, demand for services, ranging from training courses and entertainment have all increased. Organizations have a valuable opportunity to capitalize on the significant behavioural and cultural shifts of the past few weeks so that they carry across into a non-COVID world. This might mean developing omni-channel business models that combine digital and face-to-face offerings.
The move to shift infrastructure from traditional data centres to the cloud, or a mix of on-premises and cloud computing, is already showing signs of acceleration. Many businesses are already rethinking how to introduce greater virtualization into many aspects of the business, such as learning, while also planning for far higher levels of remote working than before, with the knock-on impact on the real estate and carbon footprint of the business.
What is the World Economic Forum doing about the corona virus outbreak?
Although the majority of countries and businesses are still very much in the crisis management phase of COVID-19, some businesses are already exploring how they can set themselves up on the right trajectory for growth as they come out the other side. While prioritizing the wellbeing of staff and business continuity, they are reviewing whether their strategies remain fit for purpose. This entails considering which course corrections they need to make given technological advances, evolving customer and employee behaviour, the need for organizational agility and supply chain resilience, and the expanded role of the state.
The world is still in chaos right now. What’s more, this chaos has sparked a major social, economic and technological transformation that is playing out before our eyes. Clearly, we won’t revert back to our old ways of living, working or doing business once the worst of the crisis has passed. Tomorrow is certain to be very different – which is why we must start reframing the future today.
Andy Baldwin, Global Managing Partner, Client Service, EY