by   |    |  Estimated reading time: 5 minutes  |  in Business Technology, Transform Your Business   |  tagged , ,

Executives teams have their hands full right now managing the day-to-day changes forced on their business by the global Covid-19 pandemic. Getting the business through the immediate disruption caused by stay-at-home orders is one challenge; predicting and adapting to a post-pandemic world is another.

While the intermediate term impact is not yet clear, it does seem apparent the pandemic will be a stress test for businesses. United States gross domestic product (GDP) shrank by 4.8 percent in the first quarter of 2020. The eurozone can expect a 15 percent drop in GDP during the second quarter. According to the International Monetary Fund, real GDP growth will fall to -3 percent globally. Executive teams will need to plan and execute dramatic changes to their operation to deal with the immediate crisis and to identify and seize opportunities as they unfold.

While companies in many industries have grown topline revenue through acquisition in recent years, they may, in the face of this downward economic pressure, seek to focus more on what is making them money, and spend more time enhancing the resilience of their businesses.  There are four ways this may manifest.

corporate resilience

Streamlining corporate structure

Companies had been focusing on growing top line revenue, with less emphasis placed on other financial measures.  To enhance their position to accommodate post-pandemic changes, and bolster the success rate of their stress testing, these same companies may now find themselves looking to spin out products, divisions or groups that are not strategic focus areas or which place too much demand on resources. Revenue and revenue growth may be less important right now than return on assets, cash and margin. One easy way to improve these measures might be to restructure by jettisoning divisions peripheral to the business and focus on parts of the business that are making money with higher return on capital.

Enhancing the speed to market

To make a deal in this environment, multiples could be low. Some of these spinouts will be real bargains, and that may drive a wave of middle market entrepreneurial activity as challenger companies apply new technology to old business models. This in turn could yield new product and service categories, many delivered on subscription “as-a-service” models.

To thrive in this space, companies will need the agility to identify opportunities and then quickly get new divisions onto their system of record, even as they use what-if scenarios to forecast business outcomes by modeling various business process re-engineering options. The current pandemic has already given some large companies the opportunity to flex their muscles in this area, as major automakers like General Motors have pivoted towards manufacturing ventilators. Volkswagen is manufacturing face shield components for personal protective equipment (PPE) using 3D printing as is Jaguar Land Rover.

Dyson famously promised to deliver 15,000 ventilators “in weeks,”—and after 10,000 ventilators were later canceled.

corporate resilience

 Agility in products and supply chain

Some industry sectors like hospitality, airlines and in-person events may suffer, while the pandemic creates new winners and market leaders. We are seeing very clear signs that the food supply chain is breaking for different reasons. In the UK, reliance on imported food is proving a weakness. That just augments for the British and others who import much of their food the shock felt everywhere due to the separate supply chains for institutional food and retail-packaged food. The more agile food service distributors who can make this switch to retail will have a new revenue source for themselves and the supply chain may be more robust for the rest of us.

We will see new products, new product categories and expansion of existing ones like commercial cleaning and sanitation services, contactless payments, air purifiers, walk-through disinfectant machines. Community-supported agriculture could grab substantial market shares from grocery stores. Some of these developments will be obvious and follow logically from specific needs relating to a post-pandemic environment. Others will be harder to predict and will arise from cultural shifts and other changing priorities of society.

Sweat your assets

With a sudden increase in remote work, physical offices may look more like dead wood than part of a vital, growing organization. The corporate headquarters building—which used to symbolize permanence and substance—may become a sign of obsolescence, and a large drain on financial resources both directly through rents and upkeep and indirectly through the time and costs expended by staff members travelling to the office.

Will corporations lose their “edifice complex?” They will if their customers find other, more virtual, organizations that can make their pain points disappear faster, more affordably or with greater ease. Buildings may become one thing we suddenly see as less important than a piece of PPE, or a ventilator, that in fact serve a useful purpose.

As we solve our pressing problems, we are also changing what we see as important in ways that will have far-reaching impacts. It is contingent on executive teams to be attuned to emerging opportunities and quickly mobilize resources to capitalize.  Whatever the learning experience will be after this initial shock, there will be opportunities for those willing to grab them, and those willing to think differently and jettison the static past for the agile future.

corporate resilience

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One Response

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    Nice Tips! The coronavirus has had unprecedented impacts on the world — and the worst is yet to come. Companies must act today if they are to bounce back in the future. Doing so will help the world as a whole recover — and, we hope, become more resilient in the process.


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