When we try to predict what the economy will look like weeks, months, and years from now, it’s important to remember that this is not the first time the human race has had to come back from a low point. No matter which example you choose to look at — whether it be in sports, politics, or economics — humans have a way of adapting. However, it will take a certain skill set to do so successfully under our current circumstances.
In an article published on McKinsey last month, the author describes five qualities that are critical for businesses trying to survive the transition to a new sense of normalcy: resolve, resilience, return, reimagination, and reform. These stages are not set in stone — there may be some overlap and they may come at different times for certain business owners, but they are all worth thinking about when considering how to do business in our new economy.
While the process looks different for everyone, one thing is universal: those who step up their game will be better off and far more ready to confront the challenges—and opportunities—of the next normal than those who do not.
1. Start bringing in new revenue as quickly as possible.
Companies are going to need to fundamentally rethink their revenue profile in order to position themselves for the long term and to get ahead of the competition. To do this, companies should follow McKinsey’s “SHAPE Up” model:
Start-up mindset. When starting a new business, action often comes before research and creative testing is favored over in-depth analysis. It’s important to establish a brisk cadence that encourages agility and accountability by implementing daily team check-ins, weekly 30-minute CEO reviews, and twice-a-month 60-minute reviews.
Human at the core. Companies will need to rethink their operating model based on how their people work best. 60% of businesses surveyed by McKinsey in early April said that their new remote sales models were proving as much (29%) or more effective (31%) than traditional channels.
Acceleration of digital, tech, and analytics. While the term “Zooming” has become as commonly used as “Ubering,” many companies still have not fully embraced the rapid acceleration of technology that is crucial to enduring the COVID-19 crisis. The strongest companies are successfully using advanced analytics to combine new sources of data, such as satellite imaging, with their own insights to make better and faster decisions and strengthen their links to customers.
Purpose-driven customer playbook. Companies need to understand what customers will value, post-COVID-19, and develop new use cases and tailored experiences based on those insights. We recommend using social media strategies to communicate with your customers and provide information-rich content that is easy to understand.
Ecosystems and adaptability. As more supply chains are being disrupted every day — including the meat industry — adaptability is an important characteristic of a resilient company in crisis. The adaptations to start implementing include changing the ecosystem and considering nontraditional collaborations with partners up and down the supply chain.
2. Be open-minded to new business opportunities.
As the demand for certain products and services shifts globally, new vulnerabilities are being revealed in nearly every sector of the economy. Even still, some companies have made rapid changes and found innovative ways to grow their business, even as their competitors struggle to maintain. The most common changes made at these companies all relate to increased visibility, agility, productivity, and end-customer connectivity.
To prepare for a wider and more acute range of potential shocks, successful companies will have to completely overhaul their operations and supply chains to reflect consumer demand and balance their dependency on outside suppliers in a more manageable way. We will see more and more companies using multiple suppliers across the global supply chain and relying on more creative strategies for manufacturing.
Beyond supply chain operations, the way we work may never be the same after COVID-19. While we have been moving towards a workforce more dependent on automation and technology for many years, the pandemic has pushed us years ahead of schedule in terms of working remotely, using digital communication, and collaborating without any face-to-face meetings. In operations, changes will likely go further, with an increased decline in manual and repetitive tasks and a rise in the need for analytical and technical support. This shift will call for substantial investment in workforce engagement and training in new skills, much of it delivered using digital tools.
3. Be prepared to move quickly.
In 2019, a leading retailer was exploring how to launch a curbside-delivery business; the plan stretched over 18 months. When the COVID-19 lockdown hit the United States, it went live in two days. There are many more examples of this kind. “How can we ever tell ourselves that we can’t be faster?” one executive of a consumer company recently asked.
Coronavirus has encouraged organizations that have been putting off certain forms of innovation for years, mostly by forcing shifts in their operating models — clear goals, focused teams, and rapid decision making have replaced miles of corporate red tape. Now, as the world begins to move into the post-COVID-19 era, leaders must commit to not going back. The way in which they rethink their organizations will go a long way in determining their long-term competitive advantage.
Leaders of resilient companies must rely on the skills that put them in their role to being with: creativity, forward-thinking, and the ability to guide their teams through organizational change. Returning to “business as usual” won’t work with the ever-changing environment. By rethinking how your business can recover, operate, organize, and use technology, even as your employees to work, your organization can set the foundations for enduring success.
Reach out to us today to learn how the associates of Milikowsky Tax Law can help you make these changes and avoid the risk of penalty or audit.