Redesign business and cost structure for strength and agility
This crisis has upset past beliefs and models of costs. Costs that were once fixed in the minds of business leaders have become more variable (think office space) while capabilities that might have been differentiators in the past are now acceptable minimum offerings (automation and collaboration technologies).
As Vietnam settles into this new normal of “business as usual”, leaders must continue to balance between cutting costs in a way that doesn’t harm the business while redirecting costs to the drivers of growth. In order to prepare for future shocks, it is timely to revisit strategic priorities, look for what is different in the value chain and bring your people with you into the new way of operating.
Three key actions to take now that can help your business emerge fit for growth from this crisis
Redirect costs to the right growth drivers
First, answer some simple questions about strategy:
- How has your market changed? What’s happened to your customers, suppliers and competitors? What market trends or disruptors have accelerated?
- What value propositions look promising in a post-COVID-19 world?
- Can you articulate the few things your organisation needs to do better than anyone else in order to meet those value propositions? What will your competitive advantage be?
- Are you investing enough in those few things? Where do you need to spend less so you have the funds to redirect costs to value-creating differentiation?
These questions should help you quickly frame your few must-haves — the handful of capabilities that differentiate your company in the market. Doubling down in these areas helps ensure that no matter what the outcome, your business has the right muscles to emerge stronger.
Combine steps to get lean, so that it’s possible to reinvest and grow
Work together to identify what’s changed for good and how the business should respond. Leaders will need to solve the immediate problems, while keeping the ever-changing future in mind.
Actions in both the short and medium term will be a combination of “no-regrets” moves (low-risk moves that help in any scenario) and “strategic bets” that are high-reward moves in the scenario on which you’re placing your bets.
What's different now:
- Commercial: Coupled with digital acceleration, demand shifts have significant potential to change the competitive landscape
- Operations: Supply shocks have shifted the focus from efficiency to resilience and agility
- Enabling and compliance: Leaders are more clear on what truly matters to business performance and how they can best deliver it
- Across the value chain: Review the potential of new workforce configurations
Lead with purpose toward a future where your company stays fit for growth
In the crisis, you saw people rally in real time. Leaders should take action to isolate the few behaviours you want to promote and sustain — ones that have allowed your teams to solve problems quickly — then build them into your new way of operating and promote them religiously, so that you can keep the level of energy and effort you’ll need.
Changed behaviours resulting from the crisis include many examples, but here are a few standouts:
- Give teams autonomy to solve problems
- Collaborate across the normal boundaries of hierarchies and functions
- Show empathy, express gratitude and place value on learning
- Take accountability for decisions and raise the tolerance for imperfection
People believe in a positive future and want to actively contribute to it, yet it’s important to acknowledge that there’s no going back to what was.
Get in touch
Johnathan Ooi Siew Loke
Partner, Deals and Consulting Services Leader, PwC Vietnam
Tel: +84 28 3823 0796