We live in an age of essentials. People are only buying goods they deem to be essential. For months, only businesses deemed essential were permitted to operate. Only essential employees were allowed to leave their homes to do their jobs.
It’s clear that what consumers regard as essential has shifted in the blink of an eye. Just two years ago, 82 percent of U.S. consumers said they wanted more human interaction, not less. Reading that statement now will probably make you cringe (or even laugh). Of course, people still crave a sense of humanity and realness in their experiences — it’s just that they know that their lives can go on without this, at least for a while. And it’s not just rates of in-person interaction that have seen a change. The U.S. savings rate, according to the U.S. Bureau of Economic AnalysisPDF, soared to a stunning 33 percent in April, up from 8 percent in February. It’s difficult to find a time in history when customer behavior has taken such a dramatic turn. Wants? Those are so January 2020.
But what about businesses? As a leader, your new — and perhaps only — mission is to change your company with the times. It’s clear that businesses that are essential to people’s lives will recover faster, and those that are perceived as extraneous will have a short runway to adapt to the new normal. But this is a moment for leaders of all businesses to grapple with what is essential about their own operations, processes, and products or services.
Everything you do now will be scrutinized: Is it essential or not? Companies holding out for a post–COVID-19 bounce back to things as they were will be sorely disappointed. Instead, consider this just the beginning of shifting behavior from consumers. That reality calls for a new kind of thinking and action from companies: Double down on digital transformation, know what to hold, manage in shorter increments, and plan for operational resilience.
Double down on digital transformation
In the matter of a few weeks this spring, a lot of analog activity went digital: meetings, conferences, concerts, graduations, and even work itself. Companies that had taken a half-hearted approach to digital transformation now have little choice but to ramp it up — especially as it relates to customer experience. CFOs across the U.S. know this: According to the June 15 PwC CFO Pulse Survey, 56 percent of global CEOs said they are considering deferring or canceling planned investments. Of those, however, just 11 percent plan to reduce investments in digital transformation.
The time to stop dabbling in digital transformation was pre–COVID-19. The difficulties of ramping up online stores and systems for suddenly remote employees — including implementing virtual digital tools for collaboration and product management in scattered living rooms and on dining tables — are evident. Companies that don’t go all in now won’t see the payback when the next disruption comes along.
Committing more comprehensively to digital — tech, tools, and ways of working — allows companies to push through the swift changes in thinking and operating that enable them to be essential in all conditions. And digital tools will enable organizations to deliver the essential products and services to customers faster and more efficiently.
Know what to hold
Widespread shutdowns have forced companies — many for the first time — to examine their breadth of activities. Some activities were halted because there was no demand. Others were too hard to execute safely, or the supply chain was disrupted. The old way of thinking would be to simply buy time until a company can go back to what it was doing before. But given that there will be no quick snapback to the status quo, it’s time for organizations to make calculated decisions about what to bring forward with them into the new normal.
Committing more comprehensively to digital allows companies to push through the swift changes in thinking and operating that enable them to be essential in all conditions.
Ask yourself: Which of your company’s products and services have seen top-line revenue impacted the most? Margins are irrelevant right now, because they’re all under pressure. But it’s worth examining which of those impacted items are likely to recover in 60, 90, or even 180 days. Look critically at the “protected” status of your products and services. The things you’ve always done just because “we’ve always done this” should be the first to be examined. Don’t expect to keep them. For everything in the middle, or with a chance to recover in the next 60 to 180 days, ask yourself if you can shift a product or service quickly and efficiently to meet a burgeoning demand or make it more relevant faster.
Manage in shorter increments
Once you’ve narrowed down what to keep and what to let go, it’s time to take the counterintuitive move of shortening your perspective. To thrive in the current environment, it is essential to think in smaller increments of time: survival sprints. You’ve likely got fewer people to depend on for ideas and execution. Those people have less time and are working under conditions that are not ideal — they might be homeschooling their children, distracted and unable to work at the same pace as they did before, or physically unable to be in the same place as clients and customers. So reframe your thinking and your strategy: Instead of imagining what’s possible, understand what’s feasible. Everything strategic now must be immediately executable and, potentially, delivered in a remote or low-touch format.
It follows that work should shift to time frames of two to three weeks, not quarters or halves. Dissect every problem, every strategy, and every essential to-do into short sprints for survival. Some companies have already said they won’t be giving quarterly guidance — there’s just not enough visibility into next week, let alone the next few months. Without a focus on meeting quarterly expectations, leaders can think about what needs to be done now to build in a level of flexibility and agility that will be helpful today and in the future.
Operating in this mode may require leaders to break a cultural norm by assuming a more command-and-control style. Most organizations are working with what they’ve got: lower budgets, less time, shorter runways, and tighter margins. That doesn’t leave as much space for consensus building. Temporarily adapt your mind-set to accept that not everyone will get a say and not everyone internally will be happy or included.
Plan for operational resilience
Companies that reap consistent value from their digital transformations and their ability to deliver what customers want aren’t just living in a fantasy world of perfect conditions. Quite the opposite. They are more likely to have survived multiple disruptive events themselves, according to PwC’s 2020 Global Digital IQ research, which was conducted late last summer. A full 67 percent of leading companies — defined as those companies that say they are getting a return on all aspects of their digital investments — had experienced a major disruption in the two years prior to our survey (including significant business model changes). With few exceptions, they emerged stronger. There’s just one small problem: This group of leading companies is small — just 5 percent of all organizations.
Still, their experience reflects a type of thinking that companies must adopt now in order to become essential. This group long ago ditched the idea of digital as a singular effort or segment, and instead embraced digital as its strategy. These companies have invested in transformation not as a one-off, but as a continuous process. Developing an ability to pivot isn’t just a prerequisite for surviving a crisis — it has to be an essential part of operations.
Pulling off this set of shifts amid a crisis may sound like a tall order. But we have seen companies succeed when the entire team works together — business strategists, technologists, and experience or creative experts — on the challenges that matter most. (We call this BXT.) Bringing an organization’s minds and talents to bear simultaneously on business, experience, and technology can enable companies to transcend survival mode, boost productivity, reduce costs, solve tough problems more efficiently, and get to market faster.
Whether companies are navigating unprecedented challenges or simply laying plans to grow the business in the future, building in this level of resilience into daily operations will make a lasting difference.