Given our current economic and social reality, many organizations have no choice but to advance their transformational agendas. My colleague Michelle Gronning touched on this in a recent point of view, Now is a great time to get your business fit for growth, where she challenged organizations on if they were focused on the right strategic objectives and agile enough to pivot when needed.
Whether COVID-19 has created headwinds that your existing capability set is ill-equipped to address, has widened a digital divide within your workforce resulting in competitive disadvantage or has even created opportunities for growth you want to sustain, now’s the time to ask yourself whether the capabilities that helped you grow pre-pandemic are the ones that will set you up for sustainable growth post-pandemic.
Organizations that thrive through disruption are more strategic with their cost management to direct resources and investment to what matters most while shifting them away from areas that are no longer a priority. It’s not just about taking out costs. It’s about growing your business.
So what matters most in your organization? And, in light of what we’ve learned during the pandemic, how has the basis for competition changed for your organization?
Traditionally, we’ve thought about competitive differentiation in terms of a product or service you’re able to create and be the first to bring it to market. But differentiation can also come from intrinsic capabilities like strategic agility, operational resilience and trust—things that are proving increasingly important for organizations that want to emerge stronger from the pandemic.
The pandemic has highlighted that many organizations have a gap with respect to their strategic preparedness—that they aren’t able to quickly respond to disruption. I often speak to clients about being more strategically agile. Too many organizations develop plans that reflect the state of the business when they were created and don’t adequately consider disruptive scenarios. And while COVID-19 is the most present and acute example of this, even in “normal” times, organizations and entire industries are constantly changing.
What does being strategically agile look like? Take, for example, an oil producer in the energy sector. Because of the volatility in the price of oil, the business doesn’t have one strategic plan—it has multiple plans for each price range. As a result, an agile producer is as prepared for a CA$75-per-barrel day as they are for a CA$25 reality. Most importantly, they’ve cascaded this plan through their operations.
Winning businesses plan for the unknown and are better able to make fast decisions and adapt without hesitation. Now compare this organization’s ability to respond to disruption to their competitors. It’s a real economic differentiator when volatility is potentially a new normal.
The pandemic has been a wake-up call for organizations that haven’t been deliberate in building resilience into their operations. Given the disparity between organizations that were prepared versus not in respect of the pandemic, one could argue that being operationally resilient should be a core—and differentiating—capability to invest in going forward.
Let’s take a look at Canada’s telecom companies to illustrate this. The need for broadband connectivity during the pandemic has significantly increased as work, school, entertainment and social patterns changed. During the first few weeks of the lockdown, broadband usage grew by the equivalent of a year’s worth of demand growth. Through it all, Canadian communications networks maintained their leading position relative to global peers as they prioritized investing in flexible capacity to deal with spikes in demand, and this resilience supported the economic and social needs of the country. Contrast this with countries that have taken a bigger hit on GDP as a result of chronic underinvestment in communications networks.
Predict and adapt to change by identifying critical services and building resilient processes and technology to deliver on customer expectations. This helps you confidently move forward with investments and plans knowing they’re aligned to what matters most to your organization.
Businesses exist in an ecosystem, and the value in this ecosystem is defined more broadly than just “shareholder value.” The pandemic has highlighted the importance of the trust agenda when it comes to what your stakeholders—customers, employees, suppliers, communities, governments and regulators—care about. I’m seeing our clients’ stakeholders ascribe increased value to resilience, sustainability and purpose, especially during times of disruption, volatility and uncertainty.
It’s important to consider the non-financial impacts to capture the true value of your business and build trust with customers, employees and other stakeholders. For example, the government has a central role in helping Canadian citizens and industries navigate the pandemic and emerge stronger. To help with this, public and private organizations can seize the opportunity to build trust by advancing objectives that support both corporate goals and public-policy objectives. A commitment to sustainability is one way companies and governments can advance their mutual ambitions. For businesses, investors will see them as a more reliable and less volatile investment; for governments, citizens will benefit through clean growth and healthy communities.
The pandemic has put a positive spotlight on organizations that had already built the muscle of strategic agility and operational resilience and understood the importance of the trust agenda. On the other hand, it has also exposed organizations that weren't prepared and defined “value” too narrowly.
There’s now a real-time opportunity to reinvent the way you do business and set yourself up to come out on the right side of disruption. So what can you do to be fit for growth? Begin by asking yourself these questions:
Have I taken a clear-eyed view of these new capabilities that will be increasingly important for my organization to compete?
Am I investing my organization’s limited resources in a deliberate way so as to double down on these capabilities to create competitive advantage while de-emphasizing or eliminating the ones that don’t?
What is the incremental value (in the broadest sense of the word) that my organization can create by taking a deliberate approach to its “trust” agenda, and how can I transform the functional areas of my business to truly live that?
If you found this interesting, check out our point of view on New opportunities to drive change and innovation in uncertain times, where our National Assurance Markets Leader dives into how CFOs can help their organizations strategize for the future.
As always, reach out to me anytime to discuss the questions and challenges you’re facing in these extraordinary times.
Partner, PwC Canada