- June 29, 2020
- Posted by: Ramkumar
- Category: Strategy
How post-COVID19 world will be different
For a time in history, every organization gave an identical simplistic mission statement: Guard our people, clients, and business. The drills companies received in the months after the coronavirus outbreak was severe. Digital, and automation actions, for both customer intercommunications and internal operations, quickened at extraordinary speed. Supply chains burst across the globe, indicating that companies have for too long surrendered elasticity for efficiency. As management teams delve into the complicated process of recovery, one fact is amply apparent: We cannot afford to go back to the traditional way of doing things. In this post, I will discuss how the post-COVID19 world will be different.
Businesses that most aggressively change and extend new operating modes will turn this disaster to their advantage. This recovery will not be a straight route. Employees will go back to work, and operations will restart on different timetables, following different curves across various countries, industries, and sectors, developing an asymmetric restoration for all businesses with global footprints and value chains. Besides, the pandemic will remain to test all of us, hitting at the heart of communities and directing that we get equipped for consequent series of reinfection and containment.
How post-COVID19 world will be different – A pragmatic, digital, automated system
Digital technologies and automation performed a vital role in many companies’ initial response to the crisis after employees turned work from home on an enormous scale. It is neither videoconferencing technology nor collaboration software nor the bandwidth that was the differentiator. However, the unforeseen readiness of each function in the company—IT, to be sure, and legal, finance, compliance, sales, and additional services—cut through any obstacle needed.
Variants of this occurred ubiquitously across every section of the business in each industry. Digital roadmaps, once marked in years, quickened rapidly in days and immediately demonstrated their worth. This acceleration was real even for domains like complex business-to-business (B2B) sales, running a bastion of in-person interactions. Bain research reveals that more than 70% of B2B buyers—and an increasing number of sellers— observe that virtual sales calls are as efficient as in-person calls for complicated products, even those requiring a significant degree of customization or configuration.
Likewise, automation aided companies immediately react to swells in demand. For instance, confronted with the immediate requirement to fill 100,000 job positions, Amazon shifted to automated systems to select more than a million job candidates.
A new Bain survey of IT buyers reveals that more than 80% of companies are expediting their automation initiatives in response to Covid-19. However, if antiquity is any guide, less than 50% of these companies will deliver their automation performance goals. As the recovery gains, firms need to instantly lock-in and continue the success of their tactical, crisis-response experiments by teaching them in a more profound vision of what the post-COVID-19 future seems like and how they must transform to succeed. Long-term success will depend not on automating a menu of tasks but on redesigning the work and processes with a focus toward automation and digitalization where they will present the most significant value.
How post-COVID19 world will be different – Flexibility for a chaotic environment
Although efficiency across functions and business models got prioritized for decades, Covid-19 presented the truth that it usually came at the cost of resilience—companies’ capacity to recuperate from shocks immediately. For instance, many shared-services centers grappled with adjusting when all of their employees required to work from home. Some firms had operating models that allowed them to immediately train and redeploy idled employees to other urgent needs, such as leading retail store floor employees to digital fulfillment roles. However, many other fumbled. Maybe nowhere was the absence of resilience more apparent than supply chains.
Over the years, rising market demands on cost competitiveness have rendered into constant pressure on supply chains. Companies have marshaled all the tools at their end in a highly global economy to accelerate efficiencies, decrease costs, and optimize each step in the chain. Before this pandemic, supply chain leaders were starting to recognize the constraints of these cost-efficient but fragile supply chains in the light of frequent disruptions, including natural disasters, increasing trade barriers, demand shocks, and labor confrontations. The scramble to restore supply chains during the pandemic further emphasized the boundaries of rigid, obscure supply chains.
The numbers on the loss caused by supply chain disruptions are severe and compelling. One research published an average 7% reduction in sales and an 11% rise in costs, with extended recovery periods varying from months to more than two years. One of the obvious lessons from the shocks associated with Covid-19 is that today’s supply chains are incredibly complicated and too rigid. Hence the future will require both more discernibility and traceability.
Firms are presently exerting actions to build resilient networks of suppliers and manufacturing partners. That involves setting up alternative suppliers, manufacturing sites, and assembly nodes and getting the most of Industry 4.0 tools to optimize cost, gain visibility over the network, and quicken reaction times. It indicates moving some offshore manufacturing onshore or closer to core markets to increase response time. For instance, Toyota decreases risk by having one supplier provide 60% of the required parts, while two new suppliers each contribute 20%.
Companies are adopting cloud-based supply chain applications and other tools to share data with their networks of suppliers and partners. Through the Covid-19 crisis, many manufacturers needed greater visibility into their supplier’s supply chains—a habit worth maintaining. The ability to analyze production capacity with real-time demand signals will be crucial to advance-retreat-adapt-repeat throughout the recovery.
Flexibility does not happen without cost. The principal issue confronting operations leaders moving ahead is not whether they will invest in resiliency, but where it is required and where the price will pay off.
How post-COVID19 world will be different – The call for simplicity
The Covid-19 crisis and higher flexibility requirement also reinforced another reading that prospective supply chains should not carry yesterday’s complicated product portfolios. During Covid-19, firms maintained the spiking demand or the hurdles of operating plants and warehouses with fewer employees and inputs. They concentrated on their profitable products customers required most—and skipped the rest. So the long ends of less-profitable products that firms always intended to cut were eventually driven out. Consequently, many businesses report remarkable improvements in productivity.
Now is the opportunity for businesses to study at the products that they do not want and cut them. And, when attractive new product opportunities arise, as they will, firms need to evaluate the apparent revenue opportunity against the obscure cost of complexity. The best companies rely on a single rule: Do not add a new product without deducting an old one.
Simplification in the light of necessity goes beyond product series and into organizational preferences and processes. Product complexity propagates organizational complexity, which in turn, breeds process complexity.
Agility that persists
In two quick months, Covid-19 drove in behavioral shifts; many managers had attempted to induce their firms for ages. Accelerated innovation. Decisions made quick. Bureaucracy circumvented. Critical requirements launched. Unnecessary tasks deferred. Small teams on the front lines, each encountering various phases or separate pandemic outcomes in their markets, typically led the way. Swift, stand-up meetings concentrated on the demands of the day and the critical goals of the week.
Managers need to regularly maintain and sustain innovation by building more Agile teams and growing the principles of Agile throughout the organization.
Covid-19 slashed plans and budgets. Managers can utilize that to their benefit as well. Instead of attempting to refloat the annual and three-year projects that sank, substitute them with quarterly sprints. Recognize who your prospective customers are, what they require, which highest-priority products will satisfy those needs, and then budget for and finance the organization and processes to sustain them.
Every business must decide on how to restart operations. To be successful, firms need to position themselves for a world of continued turbulence and constant shocks to the system, where adaptation and resilience will generate the most significant value.