Middle East, Africa, and the World at large, now have a new normal of economic activity because of the Covid19 Pandemic, and new thought on ways of leading businesses into profitability have emerged.
A Mckinsey study revealed that the pandemic has both revealed and accelerated a number of trends that will play a substantial role in the shape of the future global economy. In our conversations with global executives, they have identified five priorities. Companies will want to adopt these five priorities as their North Star while they navigate the trends that are moulding the future.
The five priorities CEOs and Business Owners my pay attention to include “Centring Strategy on sustainability, Transform in the Cloud, Cultivate the Talent of Tomorrow, Speed as a Muscle, and Operate with Purpose”.
Centre Strategy on sustainability
Sustainability and environmental, social, and governance (ESG) issues affect how all companies do business—increasingly so in recent years.1 More companies, and their investors, are recognizing sustainability as a strategic priority that involves significant business risks and opportunities. But historically, few companies have organizational structures that are designed to treat sustainability as a material business issue. Instead, sustainability activities—and the organizations that support them—have focused primarily on investor relations, PR, and corporate social responsibility.
To get sustainability programs right, companies have big decisions to make. To start, they should choose which issues under the broader sustainability umbrella should be the responsibility of their sustainability organizations and which issues should be left to other parts of their businesses. The issues range widely, from building new low-carbon businesses and commercializing green products to managing environmental compliance and ESG reporting more proactively.
Transform in the Cloud
During the past 20 years, IT organizations have adopted a range of innovations—for example, virtualization and Linux—that have made running business applications much cheaper and that have required only modest investments. Cloud adoption has a different economic profile. While exploiting cloud requires investment in building capabilities and migration applications, it’s more efficient in the long term, sometimes markedly so for companies that have not fully optimized their technology environment.
The biggest benefits accrue to the business from faster time to market, simplified innovation, easier scalability, and reduced risk. Cloud platforms can help deploy new digital customer experiences in days rather than months and can support analytics that would be uneconomical or simply impossible with traditional technology platforms.
Unfortunately, technology-funding mechanisms can stymie cloud adoption—they prioritize features requested by the business now rather than critical infrastructure investments that will allow companies to add functionality more quickly and easily in the future.
CEOs can help the senior team recognize that infrastructure investments in cloud platforms represent a source of competitive advantage rather than a cost to be managed. Once the top team gets that right, a lot of other things fall into place, including your technology-funding process, which begins shifting toward products or platforms rather than projects. Projects are one-time investments funded in a yearly boom-and-bust cycle. Products in general (and cloud platforms in particular) require more stable, ongoing funding and consistent “ownership” to optimize new functionality and mitigate technical debt.
Cultivate the Talent of Tomorrow
Business leaders watching their organizations experience profound upheaval because of the COVID-19 crisis may find it difficult to understand what it all means until the dust settles.
But the pandemic hasn’t afforded them, or any of us, that luxury. It has created profound and immediate changes to how societies operate and how individuals interact and work. We have all witnessed an at-scale shift to remote work, the dynamic reallocation of resources, and the acceleration of digitization and automation to meet changing individual and organizational needs.
Organizations have by and large met the challenges of this crisis moment. But as we move toward imagining a post pandemic era, a management system based on old rules—a hierarchy that solves for uniformity, bureaucracy, and control—will no longer be effective. Taking its place should be a model that is more flexible and responsive, built around four interrelated trends: more connection, unprecedented automation, lower transaction costs, and demographic shifts.
To usher in the organization of the future, chief human-resources officers (CHROs) and other leaders should do nothing less than reimagine the basic tenets of organization. Emerging models are creative, adaptable, and antifragile.1 Corporate purpose fuels bold business moves. “Labour” becomes “talent.” Hierarchies become networks of teams. Competitors become ecosystem collaborators. And companies become more human: inspiring, collaborative, and bent on creating an employee experience that is meaningful and enjoyable.
Speed as a Muscle
Speed has been a fundamental characteristic of the COVID-19 pandemic—the virus hit fast, sending much of the world into lockdown just months after it was first detected. Businesses reacted rapidly, reorganizing supply chains, adopting remote-work models, and speeding up decision making with surprising velocity. Vaccines were created with unprecedented swiftness. And as with prior crises, the organizations that acted quickly to counter the COVID-19 downturn dealt with the disruption better than the organizations that reacted more slowly.
The need for sustainable speed – Speed is also likely to be a central feature of what happens next—with one important difference. Over the past year, adrenaline unlocked speed. In the near future, speed will need to arrive by design.
For companies to achieve long-term resilience, it is imperative for them to ensure that the speed they successfully unlocked during the pandemic remains sustainable in the future. To do this, organizations will need to take into account not only potential strains on capacity but also the mental health of their workforce and the burnout often experienced by employees. To prepare, businesses need to ask and answer the following five questions.
During the pandemic, many companies have been able to develop a deeper understanding of customer behaviour. Real-time and detailed consumer segmentation can replace broad-brush, less accurate survey-based understanding.
These data can not only be used to make better, more specific longer-term bets on how demand for a particular product or service may evolve but can also open up a world of new possibilities on how businesses can adapt at the speed of culture. Marketing campaigns will likely need to be conceived, launched, and adjusted much faster than was the norm even a couple of years ago.
Many B2B companies value the traditional sales model, and that new-relationship formation will continue to occur in person. There is research that supports the view that developing trust with B2B customers is tougher in entirely remote environments.
However, there is also compelling evidence that B2B buyers prefer the convenience of online, or even automated sales, once trust has been established. An effective way to continue the relationship, then, is to ensure access to convenient online sales channels to drive speed and convenience for a new generation of B2B purchasers.
Operate with Purpose
The free-market economy is one of the most important reasons for the wealth creation and improved quality of life humanity has enjoyed in recent generations. In 1950, for example, Norway had the world’s highest life expectancy (72.3 years). Now the global average is higher (72.6 years), and in Africa, where it is lowest, it is rising fastest. In China and India alone, more than 1.2 billion people have lifted themselves out of extreme poverty since their countries began to shift their economic policies toward more market-oriented principles.
None of this could have been done without economic growth. And that is what free-market-oriented economies, in their many different varieties, have delivered better than the alternatives.
The business ecosystem is evolving; those who resist will find themselves not only on the wrong side of history, but also at a competitive disadvantage.
Business leaders should embrace the apparent contradiction—of low trust and high expectations—and make the choice to demonstrate that they see their mission as serving not only shareholders but also customers, suppliers, workers, and communities. The common term for this is “stakeholder capitalism,” and we think it’s time has come.
The full report is available from Mckinsey.com
Source: Mckinsey
