Over the past few months, as organizations scrambled to adjust to a digital-first economy and a newly remote workforce, long-term projects were fast-tracked and operations were rapidly reworked to accommodate emerging needs. Now, as the focus shifts from triage to long-term strategy, the pandemic recovery phase begins. Though many businesses have made significant changes to their operations during the crisis, the long-term viability of these ad-hoc solutions requires additional scrutiny.
A PwC Pulse Survey in May found that 72 percent of finance leaders believe the changes being made now will make them “more resilient and agile in the long run.” While it’s true that the groundwork has been laid, there’s still much to be done. What worked before won’t necessarily be enough to position businesses for sustained success in the “new normal.”
For example, the PwC survey also found that “81 percent of CFOs are planning cost-containment measures,” as a tried-and-true means of business recovery. But cost-cutting alone won’t strengthen a company to withstand the fierce competition that’s emerging as the global economy contracts.
Here are some of the biggest trends and business opportunities we expect to see during the pandemic recovery phase:
Pandemic Recovery Trend #1:
Greater organizational complexity
Whereas executives tend to think of organizational complexity in an institutional sense, their employees tend to experience it in a much different way: broken processes, ill-defined roles, and accountability issues.
Amidst the chaos of COVID, this type of complexity has only increased. Furloughs have placed additional hats on the remaining team members’ heads, and quick pivots have made for unclear priorities.
Opportunity: Facilitating agile decision-making
Fortunately, the need for rapid implementation during the crisis has yielded some positive trends, as well. Many businesses reverted to a start-up mindset, iterating quickly and giving remote teams greater agency so that leadership could focus on bigger strategy pieces.
A McKinsey survey of CPG retail executives found that, “More than 80% of executives said decisions made during the COVID-19 crisis are being made faster than before the crisis…[and] major decisions, such as closing stores or exiting a business unit, are requiring far fewer meetings.”
Though initially deployed out of necessity, this shift in the organizational process can help businesses maintain focus and strategic clarity going forward. By narrowing priorities at a high level, leadership is able to stay focused on big decisions—and objectives remain aligned with those high-level priorities. With the help of an organizational transformation expert, businesses can fully institutionalize this process and build on it.
Data visualizaton also aids in rapid decision-making by distilling huge volumes of data into meaningful—and easily digestible—information. At the same time, it’s a tool that’s only as good as the data and design that go into it. Without proper analysis and purposeful design, data visualization can present misleading patterns or a skewed view of problems and their solutions.
At Business Talent Group, we’ve seen a significant uptick in requests for independent data visualization and value chain analysis experts recently, which would suggest that companies are placing greater value on objectivity and proven experience in these areas.
Pandemic Recovery Trend #2:
With the global economy expected to contract 4.7 percent in the pandemic recovery phase, companies in virtually every market will be fighting each other for a bigger piece of a shrinking pie. PwC chair and senior partner Tim Ryan said he expects, “six to 18 months of fairly intense competition.”
According to McKinsey’s preliminary impact assessment, retail and consumer goods sectors anticipate doubling or tripling their allocation of eCommerce resources in the near future. Those that hesitate risk further narrowing already-slim margins: “Retailers that don’t proactively adapt to changing conditions could see their margins fall 200 to 400 basis points because of increased labor and fulfillment costs.”
Adding to this is the fact that when COVID began closing retailers’ doors, brand loyalty went out the window. McKinsey observed that, “Up to 40 percent of consumers have switched stores and brands during the crisis, and many may choose to keep their new habits.”
Opportunity: Meeting customers (every)where they’re at
Independent product development experts are in high demand as companies shift toward more human-centered design and service. But while securing greater market share in highly competitive markets means innovating new products and services to meet changing consumer behavior, it also means rethinking delivery models.
Adobe’s Digital Economy Index found that online spending was up 77.8 percent year-over-year in May, yet at the same time, “buy online, pick up in store” behavior—which surged 195 percent during the shutdown—is starting to decline as stores reopen. Trends like these will continue to shift during pandemic recovery, requiring businesses to regularly reassess their approach.
Omnichannel has emerged as a winning strategy with built-in resilience. Some businesses dabbled in it prior to COVID-19, but many more found themselves scrambling to implement curbside pickup, online ordering, and other alternative channels when the outbreak occurred.
In the rush to pivot, many of these systems were broken right out of the box, frustrating consumers who expect a seamless shopping experience. Global research firm IHL Group found that non-optimized omnichannel strategies cost retailers an average of 4.2 – 8.2 margin point loss as compared to traditional in-store visits.
But now businesses have the chance to get it right. By selling products or services on multiple channels, and refining back-end architecture to support fulfillment, inventory management and payment options, businesses can meet customers wherever they prefer to shop. At BTG, we’ve seen a 425 percent increase in demand for independent eCommerce experts from businesses looking to optimize their omnichannel processes and identify new strategic opportunities for growth.
Pandemic Recovery Trend #3:
Supply chain fragility
One of the biggest revelations of the COVID health crisis has been how easily our supply chains can be disrupted. For decades, the focus had been on reducing costs and inventory through global sourcing and optimization strategies, such as just-in-time manufacturing. When the pandemic hit, it hit this globalization model hard.
“Events like coronavirus are rare, but the impact of them are so much greater because the world is so interconnected,” says Samuel Mathew, global head of documentary trade at Standard Chartered. “Modern supply chains are longer and more complex than ever before, often spanning multiple countries across multiple continents.”
Opportunity: Diversification and digitization
What applies to one crisis might not apply to another, which is why it’s important to mitigate risk not only by diversifying suppliers, but also by diversifying your offerings. Supply chain and logistics experts can help businesses secure contingencies, capacity, and inventory for existing products, but additional agility can be gained by innovating new capabilities. We saw this when distilleries began manufacturing hand sanitizer, clothing manufacturers shifted to producing masks and hospital PPE, and Dyson started designing and building ventilators.
Digitization and diversification go hand-in-hand. Top companies are leveraging digital supply network solutions to identify—in real time—weak points in their supply chains as well as opportunities for growth. Plus, accelerating digital transformation during the pandemic recovery phase not only helps improve supply chain resilience and operational flexibility; it also creates opportunities for greater efficiency.
Pandemic Recovery Trend #4:
A distant workforce & socially distanced workplaces
Many of the changes made to how we work during the pandemic—telecommuting, social distancing in offices and factories, flexible staffing strategies—are here to stay. In a recent survey, Gartner found that, “74% of CFOs intend to increase remote work at their organization after the outbreak,” and “32% of organizations are replacing full-time employees with contingent workers as a cost-saving measure.”
Though cost-savings are worth celebrating, there are a number of new challenges these new arrangements present:
- Remote / contingent talent strategy, development, and support
- Plant / warehouse / office design flexibility
- Right-sizing real estate
And these might be the most critical of all concerns, because they affect—and are affected by—all of the previous challenges mentioned.
Opportunity: Planning for flexibility
When workforces worldwide went remote overnight, few companies were prepared to manage this seismic shift in HR operations. However, many soon found that productivity concerns were unfounded, and that the challenge wasn’t getting the work done; it was getting employees the resources and tools they need to perform their best.
Organizations are now building-out and refining their remote-work infrastructure, whether using internal resources or support from remote work enablement experts. The next step will be solving for the more human side of things, such as supporting employees’ mental health as they settle into the reality of a more isolated workday.
Then there are independent talent to consider. The use of freelancers has proven to be a cost-effective and flexible way to ramp up or down. That’s why companies who want to capture the full value of such talent are building programmatic solutions that embed the use of independents across the enterprise—complete with their own infrastructure from onboarding to relationship management, and all the performance tracking, accountability, and reporting processes in between. To learn how BTG can help install and scale an on-demand talent program within your company, visit businesstalentgroup.com/enterprise
Finally, the actual space in which your business operates will require reevaluation. Businesses that are embracing remote work may find cost-savings in reducing their office space. On the other hand, an increase in inventory to support online sales and reduce supply chain disruptions will translate to the need for additional industrial real estate.
Robinson-Weeks, a large commercial real estate firm in Atlanta, estimates that, “If companies keep an extra 5 percent of inventory, it could translate to 800,000 – 1 billion square feet of new demand for warehouse space,” in industrial markets. Plants and warehouses will also have to incorporate greater flexibility into their layouts to accommodate social distancing standards that are likely to persist.
Know what you don’t know
The challenges businesses will face during the pandemic recovery phase require new solutions. Modernization and digital transformation will be essential in the coming months, and companies will need to reset their cost structures and revisit their strategic priorities if they want to come out ahead.
But the truth is, few businesses currently have all of the resources necessary to tackle these challenges. That’s why many organizations bring in independent experts to better support growth efforts and establish greater resiliency. If you could use expert support for your business recovery efforts, contact us.
About the AuthorMore Content by Emily Slayton