As firms re-emerge from the shutdown and begin to return to a semi-normal world, it will not be business as usual, since people, industry and society will all be different.
In an era of constrained growth, companies and individuals will all be addressing fragility, by looking for safety and security. They will be working to sculpt resilience by re-thinking their size and scale, incorporating optionality into the way they design their work force and supply chains, while also strengthening their balance sheets.
As I work with a range of companies and their senior management, I am helping guide their transition from managing the shock of the shut down to the new landscape they will find themselves operating in.
It is absolutely critical that business use the next four to six weeks as they await the shut down to end to get ready by asking themselves three questions:
1.What will my Customer/Consumer be like: How will the behavior and expectations of my customer/consumer be different ? What will they be doing more and doing less ?
For every industry and product category it will different, but I would expect that most firms should begin with an expectation that a)their customers will be more value driven due to reduced purchasing power combined with a need to enhance their future financial security and b) they will be ultra-sensitive about health and safety
For these financial and health reasons people are likely to move to a semi-quarantined state for at least six months to a year, as they travel less, go out less and work more from home.
2. How can I get my company to learn from and accept the new reality?
Leaders face and adapt to reality versus living in a world of magical thinking.
Every business has been shocked and this has revealed internal fault lines and hopefully also some strengths which exposed a number of new threats and possibly opportunities.
Major new realities will include:
a) Accelerated digitization of business and expansion of remote everything: Covid-19 has transformed more businesses than any strategist, chief digital or chief transformation officer. Every old school resistor has been zoomed into the future.
b) Growth Reversal: Many growth industries ( hospitality and travel) will experience depression economics as tens of thousands of restaurants close, airlines grow smaller, hotel room become dorm rooms.
c) Schizophrenia of Size: We will find “smaller is beautiful” as industries like puffed up and bloated universities get reality punched in their theoretical faces. Many will be forced to stop being pseudo sport franchises, building developers and luxury brands with unlimited pricing power to get back to focus on teaching and research.
There will be wide spread amputation of company appendages as a combination of strategic focus and financial flexibility result in harsh surgical action and sale/burial of body parts.
On the other hand “Bigger is wonderful” will also emerge, as the large well capitalized businesses such as Amazon, Walmart and Costco in retail, Google, Facebook, Microsoft and Adobe will grow even bigger buying the sawed off parts up for sale or entering new arenas as they smell blood in the water. They will use their scale and reputation to deliver the value pricing and safety signaling people are looking for.
Very few businesses will be spared in the eddies and crashing waves ahead and over the next month you and your team in order to stay afloat and navigate the seas need to do a two part audit:
a. Shock/Resilience: This is a look inside the business.
What broke or almost failed and what can we do about it. As importantly what worked and why?
b Threat/Opportunity: This is a look outside the business.
Given that consumers and customers are going to be different what parts of our business is threatened and could there are new opportunities and unmet needs we can work on ?
When doing these exercises please be real. Call out the turd on the table.
3. How can we leverage fresh sheet thinking: How would we re-start if we had a fresh sheet of paper?
So now that your team has envisioned the future consumer/customer and looked inside and outside of the business to do an audit of shock, resilience, opportunity and threats, what are you going to do?
The biggest mistake individuals or businesses can make is continuing with the status quo.
Every time there is a significant economic shock like the Great Recession, new business are born in the bonfire of the old structures. Remember that Dollar Shave Club, Uber, Airbnb and many more were born in midst of and right after 2007-2009 period.
The reason I call this era The Great Re-invention is that we have a health, financial and society crisis occurring at the same time all over the world. People are being forced to start or stop doing things for 60 to 90 days. As a result new behaviors will start and old behaviors may no longer return.
Imagine and invent without limitations except these three reality checks. 1. What ever you do has to be legal. 2. Whatever you do has to be scientifically and technically possible today and 3. What ever you do has to break even within three years.
I would then imagine your re-invention keeping in mind:
a.You are not behind your competitor but your customer. Too many companies focus on benchmarking against their competitors but beating other pathetic people does not leave you any less pathetic. When customer/consumer behavior changes this focus on what competitors do is all wrong.
b.Your competitors have changed: Either because new categories have been created or a new type of competitor has arrived. Just as when the auto companies were ogling each other Tesla, Uber and AI re-wrote the rules of the category or as Gillette and Schick were out blading and out price increasing each other, new competitors such as Dollar Shave Club and Harrys emerged.
c. Your talent needs to be incentivized, trained and aligned differently: There are only two ways to transform your company. Upgrade the people or get better/new people.
If you want your people to behave differently in this new world you will have to incentivize them differently. While people like to be informed via your press release, videos or mantras on transformation, they are most eager to understand what it means to them.Go check out Fishbowl and Glassdoor to get a look at what is on their mind and sometimes get a kick in the gut.
Put your best people against tomorrows opportunities versus todays biggest businesses.
Incentivize behavior and not just outcomes.
Invest in training. Skills are learned and not immaculately born.
Look in the mirror dear leader. We might be part of the problem.
d. The Future Does Not Fit in the Containers of the past:
Why are you organized the way you are if you are re-thinking your category, your competitors and your talent?
If you started today would you have all the people and parts that make your company. Competitors who are starting today do not have these legacy structures weighing them down.
There is a dawning of a new era.
Many opportunities and positive changes will occur after the period of shock. Use this time to get revitalized and re-invent.
Rishad Tobaccowala ( @rishad ) is the author of the bestselling “Restoring the Soul of Business: Staying Human in the Age of Data” published by Harper Collins globally in January 2020. It has been described as an “operating manual” for managing people, teams and careers in the age we live in. Rishad is a sought after speaker and advisor who helps people think, feels and see differently about how to grow their companies, their teams and themselves. More at https://rishadtobaccowala.com/