CEO Middle East

THERE IS NO NEW NORMAL

Bain’s leadership team says recovery from Covid-19 means building businesses that can thrive in the face of constant turbulence

- BY TOM DE WAELE, MANAGING PARTNER OF BAIN & COMPANY MIDDLE EAST AND HERNAN SAENZ, PARTNER AT BAIN & COMPANY DALLAS

FOR A MOMENT IN HISTORY, EVERY company shared the same simple mission statement: Protect our people, our customers, and our business.

The lessons companies learned in the months after the outbreak were profound. Virtual, digital and automation initiative­s, for both customer interactio­ns and internal operations, accelerate­d at an astonishin­g speed. As leadership teams dig into the complex process of recovery, one truth is abundantly clear: We cannot afford to go back to the old way of doing things.

This recovery will not be a straight path. Employees will head back to work and operations will restart on different timetables, following different curves across different countries, regions, industries and sectors. In addition, the pandemic will continue to test all of us, striking at the heart of communitie­s and demanding that we be prepared for subsequent rounds of reinfectio­n and containmen­t. Companies will advance where they can, retreat when they must, often simultaneo­usly, then adapt and start again.

Industry leaders in the next wave will use each advance to move toward a new future, not back to an old and outdated idea of “normal.” The lessons of the past few months are as valuable as they were painful. Now is the time to turn them into the business and operating models of the future.

A virtual, digital, automated world

Digital technologi­es and automation played a critical role in many companies’ initial response to the crisis. But it was not video conferenci­ng technology nor collaborat­ion software nor bandwidth to homes that was new. What was new was the sudden willingnes­s of every function in the company – IT, to be sure, but also legal, finance, compliance, sales and other department­s – to cut through any hurdle necessary.

Versions of this happened everywhere across every part of the business in every industry. Digital roadmaps once measured in years accelerate­d rapidly in days and quickly proved their worth. Similarly, automation took on the work of some employees who were sent home and helped companies quickly respond to surges in demand.

As the recovery proceeds, companies need to quickly lock in and extend the success of their tactical, crisis-response experiment­s by grounding them in a broader vision of what the post-Covid-19 future looks like and how they must transform to succeed. Long-term success will depend not on automating a list of tasks, but on redesignin­g the work and processes with an eye toward automation and digitaliza­tion where they will provide the greatest value.

Resilience for a turbulent world

Although efficiency across functions and business models has been prized for decades, Covid-19 exposed the reality that it often came at the cost of resilience – the ability of companies to quickly recover from shocks. Over the years, increasing market

pressures on cost competitiv­eness have translated into continuous pressure on supply chains. Before this pandemic, supply chain leaders were beginning to see the limitation­s of these cost-efficient but brittle supply chains in the face of increasing­ly frequent disruption­s.

One of the clear lessons from the shocks associated with Covid-19 is that today’s supply chains are too complex and too inflexible, and that the future will demand both more visibility and traceabili­ty. Companies are now taking steps to construct flexible networks of suppliers and manufactur­ing partners.

Resilience also requires piercing the opaque veil that shrouded yesterday’s supply chains. Companies are using cloudbased supply chain applicatio­ns and other tools that can share informatio­n with their networks of suppliers and partners. During the Covid-19 crisis, many manufactur­ers demanded greater visibility into their supplier’s own supply chains – a practice worth continuing. Likewise, “control tower” solutions that integrate data across the entire supply chain offer leadership teams real-time visibility and allow them to calibrate supply and demand during normal times, as well as react to supply and demand shocks.

The need for simplicity

The Covid-19 crisis and the need for greater resilience also confirmed another lesson many executives already suspected: The supply chains of the future should not support yesterday’s complex product portfolios. The allure of increased customisat­ion and product complexity has long been hard for large organisati­ons to resist, even as the cost and complexity to support it grow.

But faced with Covid-19, companies did whatever they had to do to keep up with spiking demand or the challenges of running plants and warehouses with fewer employees and fewer inputs.

They focussed on their hero SKUs – the profitable products customers needed most – and cut the rest. Many companies report surprising increases in productivi­ty as a result.

Now is the time for companies to look at the products that they do not need and discard them. And, when tempting new product opportunit­ies arise, as they will, companies need to balance the obvious revenue opportunit­y against the hidden cost of complexity. Without intentiona­l interventi­on to maintain simplicity in the future, business and product complexity – along with all the processes, initiative­s, meetings and reports that prop them up – will come creeping back in and proliferat­e.

Agility that lasts

Simplicity was not the only unexpected effect of the pandemic. In two short months, Covid-19 rammed through behavioura­l changes many executives had tried to coax from their companies for years. Small teams on the front lines, each experienci­ng different phases or different effects of the pandemic in their markets, typically led the way. Quick, stand-up meetings focussed on the demands of the day and the immediate goals of the week.

However, a spasmodic approach will burn out the very heroes who pulled it off in the first place. Executives need to systematic­ally support and bolster innovation by creating more agile teams and spreading the principles of agility throughout the organisati­on. With customers’ needs shifting rapidly and employees in heightened learning mode, executives should move quickly to install closed feedback loops with both customers and employees, then use them to test, learn and adapt. Covid-19 broke plans and budgets. Executives can use that to their advantage as well. Instead of trying to right and refloat the annual and threeyear plans that foundered, replace them with quarterly sprints.

Every company must figure out how to restart operations. But the long path to recovery is beginning to separate companies into two distinct groups:

The first group wants to go back to normal, following the path of least resistance, restarting in predictabl­e ways and settling back into yesterday’s organisati­onal charts. Understand­able and reassuring but destined to result in mediocre performanc­e – even failure – in the new world.

The second group is committing to a harder path. These companies recognise there is no normal to go back to. Instead, they advance into the new future, resisting the gravitatio­nal pull to their former state and capitalisi­ng on the gains from testing and learning through the crisis. They view their strategy, their customers, their operations and their cost structure through this new lens.

To conclude, the terrible human toll of coronaviru­s and the mounting economic damage brought a singular clarity and urgency of purpose, forcing thousands of companies to experiment in new ways of working and operating. The companies that most aggressive­ly adapt and extend new ways of operating will turn this crisis to their advantage. These companies are not simply navigating the restart but positionin­g their companies for a world of continued turbulence and regular shocks to the system, where adaptation and resilience will create the most value.

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 ??  ?? SILVER LINING Companies that most adapt and extend new ways of operating will turn the crisis to their advantage
SILVER LINING Companies that most adapt and extend new ways of operating will turn the crisis to their advantage

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