The COVID-19 Pandemic, and the policy response to it, have fractured everything we knew as “normal.” Long-standing tensions and social distancing have collided to throw our world into disarray leaving business leaders to search for the “new normal” while re-assessing their business.
This Pandemic Fracture has given rise to 5 Shifts that will shape our future.
Understanding these 5 Shifts will allow business leaders to guide their companies to success and resiliency in the coming years.
The COVID-19 Pandemic has fractured the business world. Understanding the shifts that have occurred because of this fracture will prepare you to lead your business to success.
The defining feature of the 2020s was not even known six months ago. No one had heard of COVID-19 or social distancing. In the first few months of 2020, the spread of a global pandemic, the resultant health policy response, and then the economic consequences of both, created an incredible cataclysm in our world. Our families and our livelihoods have been disrupted. The “normal” that we knew in both our personal and professional world has been thrown into disarray. Fortunately, now a few months into the pandemic disruption, we can begin to refocus our attention on the future.
Newport LLC partners have been discussing the ramifications of the pandemic. No one has ever been through anything quite like this, but Newport partners have navigated through many challenging situations. Collectively, we have been through booms and busts, in all kinds of different industries and businesses. With this experience base, Newport partners deliver the insights that will drive the actions needed to achieve the right results for your business.
Newport has previously outlined a three-part framework for guiding your business through the Pandemic Fracture. In the first phase – Stabilize – the emphasis was on triage with a focus on cash, costs, and communications. Then in the Restart phase, the emphasis expanded to include employees, customers, and operations. Next, the focus turns to the future and the actions needed to build success and resiliency in a new world. For this Success and Resiliency phase, Newport has developed insights to help business leaders navigate their way to the future: The Pandemic Fracture – 5 Shifts that Shape our Future.
As you move your business toward success and resiliency, keep in mind these points. First, you should be asking what has changed, and is that change temporary or permanent. Ask that question early and often because the difference is critical. More importantly, remember that your answer may change over time. What seemed like a temporary change last month may look more permanent today as the recovery horizon extends into the future.
Second, understand that all the forces of change that were acting on your business before the pandemic are still in play, but are now acting with ferocious intensity at incredible speed. The Pandemic Fracture might have temporarily pushed a few things to the side, but those issues did not go away. The old issues are still there, and in a disrupted world, they are more powerful than ever.
Third, successful business leaders will equip their company to survive and thrive in the “new normal.” To do this you must keep the prospective of your customers, employees, community, and investors top of mind. The expectations of each of these stakeholders has likely changed over the last few months, and you need to prepare for the future, not the past.
Here are the 5 Shifts:
The first Shift is Social Distancing & Norms. This is actually the only new force at play. Remember, only a few months ago, no one had even heard of social distancing. Now, this shock wave is the driving force in our interactions with each other. Our society has gone through something on an evolution around the notion of social distancing, but these practices are beginning to become the norm. Face masks, limited gatherings and physical interactions, new expectations around health and safety. These are all a permanent feature of our lives for at least the rest of this year, and maybe longer.
These changes, while assumed to be temporary, have profound implications for our lives, behaviors, and attitudes, and therefor for your business. Here is where the question of what is permanent and what is temporary is especially important. The answer will have important impacts on what your customers want, how you interact with them, and how your brand will be perceived.
Next, these new social norms are helping create a new Social Compact for Work. Business has always existed within societal norms. The working conditions common at the beginning of the 20th century were not acceptable at the beginning of the 21st century. There have been slow changes in societal ideas about work for decades. Work/life balance, compensation and benefits, worker safety, loyalty and advancement, and leave policies are all examples of trends that have been around for years. Now, all of those ideas are in flux and must be urgently reconsidered in light of both the health and economic consequences of the pandemic.
These new societal expectations and requirements affect business. Just consider the rules and expectations that the government has attached to economic stimulus plans, or the “re-opening” guidance provided by the Centers for Disease Control, the Occupational Health and Safety Administration, or state and local governments. Then add the challenge of ensuring that employees, customers, and suppliers all feel safe in your workplace. And don’t forget the issues around attracting, retaining, and developing key talent.
Addressing these issues will likely add costs and complexity to your business. Change will play out over several years, but the details around these topics, and our collective attitudes toward all of them, are critical drivers of your future success as you compete in the “new normal”. This is a good time to revisit and re-tune your business model to best fit the new expectations.
Next there is Digitization and e-Commerce. These concepts are not new, but trends and practices that were slowly building speed have now reached escape velocity. Your business needs to get on board or be left behind. We can already see that those businesses with an on-line presence, whether retailers or restaurants or manufacturers, have fared better than those who didn’t. Customer preferences and expectations have changed. Now is the time for a reassessment of your customer promise and brand position.
The trend toward digitization and e-commerce not only has implications for your business model, but also for your stance toward technology. Technology infrastructure, security, and capability will be critical elements of the success of all businesses in the future. Technology will need to be a key part of both your business model and your strategy.
A new focus on Agility and Resiliency leads to a reassessment and re-ordering of business models and asset values. The news cycle is full of predictions about what businesses or assets will lose value and what others will gain. It’s too soon to know the exact outcome, but the way we value things today is different from how we did that a few months ago. There will be winners and losers. You need to consciously act to position your business to be a winner. That requires agility.
Resiliency has become a new business buzzword, and with good reason. Over the last few months we have seen that some businesses are far more resilient than others. It is those businesses that are poised to capture the opportunity presented by the pandemic fracture. There is a new business calculus required to balance cost and efficiency against resilience. The answer will be different for each business, but the focus on agility and resiliency is key. The implications for your brand, business model, and financial viability are hugely important.
Finally, there is a Rethinking of Global vs Local. After decades of moving into a globalized world, there is retrenchment. For example, the pandemic exposed the interdependent nature of a global supply chain. We saw the consequences of asking a supply chain to do something that it was not designed to do. We also saw how geopolitical tensions and actions can break a supply chain. As noted above, what was designed for low cost and efficiency, didn’t always provide resiliency. Now there is a rethinking of what should be local and what should be global. Regardless of the outcome of that debate, your business may be affected.
But beyond supply chains, we have seen a rethinking of the role of the local, state, federal, and international elements in every business. And much of this rethinking has been messy. Local leaders disagree with state or federal leaders about policy direction or actions. The states and the federal government often seem to have different priorities. Business leaders are caught in the middle. Here is where building for resiliency will be critical to your future success.
These 5 Shifts will each affect your business. Unfortunately, you can’t just pick one Shift or deal with each sequentially. As a business leader, your challenge is to successfully navigate through all 5 Shifts in real-time. That is not an easy task, but by recognizing and directly addressing the 5 Shifts of the Pandemic Fracture, you will be well-positioned to lead your business to success and resiliency in the years to come.
Lynn Lednicky is a partner in the Houston office of Newport LLC.
SOURCE Newport LLC