Business Now & Post-COVID-19
“I can’t change the wind, but I can adjust my sails to always reach my destination.” –Jimmy Dean
By George Christian
In January, the World Health Organization (WHO) announced that a mysterious coronavirus-related pneumonia had been identified in Wuhan, China. By February, the United States had declared a public health emergency, and by March, it was officially considered a pandemic. Travel bans were implemented, borders were closed, schools went virtual, and stay-at-home orders were announced. Health care systems were thrust into caring for an unknown virus that was rapidly spreading, while more than 10 million workers filed for unemployment, and a $2 trillion economic stimulus bill was passed by Congress.
April, May, and June brought some easing of restrictions, but by the end of the second quarter, the U.S. economy (GDP) had shrunk at an annualized rate of 33%, and over 100,000 small businesses were permanently closed.
The impact of COVID-19 is far-reaching. Across the globe, there has been a shift to more mindful shopping and e-commerce. Other digital and contactless services – including curbside pickup, delivery, and drive-through – are also seeing higher adoption rates.
More than 75% of consumers in the United States have changed shopping behaviors. Specifically, they’re looking for convenience and value. For certain products and brands, COVID-19 caused supply-chain disruptions. And when consumers couldn’t find their preferred product at their preferred retailer, they tried a different brand or shopped at a different retailer.
Telemedicine has become more of the norm. Consumers are facing new personal situations, with changes in income and leisure time, which influences attitudes and behaviors.
Many employees are working from home and are recognizing that long days in the office and lengthy commutes are not as essential as once thought. Businesses are also discovering that a flexible working culture means less office space and more money saved.
So how do businesses now navigate what is clearly a new normal? How do they bring back business in an environment where the path to a vaccine is still unclear? Leading consultants say:
Companies will need to recover revenue quickly by outperforming their competition.
To accomplish this, they will need to be clear about what customers value post-COVID-19. They will have to identify the primary sources of profitable revenue and put plans in place to make sure it happens using different marketing levers. Examples include refocusing on the highest volume, most profitable products; new or revised product offerings supported by advertising campaigns to win back loyal customers; adjusting pricing and promotions; or training the sales force to support remote selling.
“Great companies are very deliberate across everything they do – all their functional areas,” says Dr. Frank Butler, UC Foundation associate professor of management with UTC’s Gary W. Rollins College of Business. “And to outperform competition, they must put the customer experience first and foremost.”
Speed will be imperative, and bureaucracy will need to be reduced.
Over the last six months, businesses have worked faster and better than they dreamed possible. Flatter organizations, created in response to COVID-19, have delegated decision-making down to a dynamic network of effective teams. Corporate bureaucracy has in many cases been replaced with clear goals, focused teams, and rapid decision-making. Action will need to be favored over research. Jumping on a videoconference to solve problems, or remote teams working together with more decision-making authority, must be more of the norm than the exception. In a world where fast beats slow, companies that can institutionalize these forms of speedy and effective decentralization will jump ahead of the competition.
Dr. Butler explains, “The ability to roll with the punches, feel comfortable with technology, and communicate across multiple platforms will be critical to success moving forward.”
Marketing will become more important than ever.
As the recovery from COVID-19 evolves, marketing will become essential to getting businesses back on track. Businesses continuing to invest in marketing will see their current customers stay loyal and attract new ones. People may not be making big purchases right now, but that doesn’t mean they’ve stopped researching. Businesses that stay in front of their market will have a much better chance of regaining revenue as customers resume more normal purchasing behavior.
“A company’s ability to market is based on the quality of products and services. That’s why is it so important for managers to focus on the labor structure to ensure the right people are performing the right jobs, so that the product and service can be optimized,” explains Dr. Allison Pierce, assistant professor of business administration at Lee University. “Focusing on people, processes, and results provides the marketers a great product to market, which enables the company to maximize profitability.”
There will be a greater level of scrutiny on marketing ROI.
Marketers will need to rethink customer acquisition and retention strategies. Instead of reducing profit margins to acquire one-off customers, some will be forced to focus on brand-building and customer retention strategies for more profitable, happy customers. “Think of Disney in this scenario – they take great care of their employees and are also big on customer experience, but they made a bad choice during this time when they announced that the new Mulan movie would be available On-Demand for a $30 rental fee. That came across as too financially driven,” says Dr. Butler.
Changing expectations will force operational shifts.
Dramatic shifts in customer expectations and demand patterns will force the need for equally dramatic shifts in operations to achieve a competitive advantage. Successful companies will have to reinvent the role of operations in their enterprises, creating new value through a far greater responsiveness to their customers – including but not limited to accelerated product development and customer-experience innovation.
“Companies must find new ways of generating revenue, especially when getting people in the door is not presently a viable method,” says Dr. Butler. “Think about museums – what kinds of things can they do virtually? This is a time when companies can really look at exploring new avenues that help them continue to do business and do it well.”
Supply chains will require redesign.
Given disruptions experienced in supply chains, successful companies will need to redesign supply chains to protect against future uncertainties with suppliers. New partnerships will need to be formed to solve disruptions in supply chains, and advanced analytics will have to be used to make better and faster decisions. Once-prevalent global-sourcing models in product-driven value chains will most likely need to shift to regional supply chains.
“For many companies, supply chain management has received a new level of attention. Moving forward, companies will need to build strategy that blends control and expands options for materials,” says Dr. Pierce. “One strategy is to become more vertically integrated so a company actually owns its supplier. Another option is dual sourcing, so that a company has several contracts with suppliers instead of depending on a sole source. For example, a company that previously had one contract for iron castings with a manufacturer in China or India may now have a contract with both manufacturing companies or even pay a little more and add a domestic manufacturer to the mix. A third strategy is to maintain strategic inventory so that a disruption will not be so detrimental to business operations. The key is to define and implement a strategy that makes the company less dependent on one provider.”
Companies must become more agile and flexible.
Companies will need to modify operations to allow for greater agility and flexibility. Whether it be more employees working remotely, supply chains being rebuilt to allow for alternative suppliers, manufacturing facilities modifying operations to meet new product demands, or businesses modifying processes and work stations to enhance employee safety, companies must continue to respond to new market conditions created by COVID-19.
Technology and automation will be key.
With the advent of COVID-19, the use of automation and technology has increased greatly. With the economic falloff and related concerns for lowering costs, as well as protecting the health of employees, suppliers, and customers, the expanded use of automation will continue to escalate.
Employees across all functions have had to advance their knowledge to use digital communications. In operations, automation will further replace manual and repetitive tasks. This, in turn, will require new workforce skills using digital tools and a greater need for analytical and technical support. In effect, it is becoming possible to imagine a world of business where human contact is minimized.
Leadership and employee expectations must align.
Successful companies will be led by those who continue to simplify and streamline their organizational structures and seek to match the right talent, regardless of hierarchy, to the most critical challenges. Leaders will place a premium on character and results, rather than expertise or experience. Additionally, leaders and their employees will need to have a shared sense of purpose and know how to get things done right.
“Top managers should be reducing uncertainty for their team,” says Dr. Butler. “It’s important to have a sense of direction and point your employees in a very clear way with actionable instructions. Studies show that up to 36% of performance is lost due to an inability to communicate strategy effectively to the people who are supposed to execute it.”
Businesses should address changes quickly.
During the early recovery period, business leaders will be forced to acknowledge and address changes in consumer behavior and demand patterns. For example, airlines will need to address health and safety by reinventing the passenger experience with “contactless” check-in, boarding, and in-flight experiences.
Analyzing these demand signals in real time and adapting quickly to bring supply chains and services back will be essential for companies to navigate the recovery.
“Companies that have been the most successful during this period so far are those that are accelerating their online programs,” says Dr. Butler. “Companies that have been slower to shift or acclimate have lost business. Corporations like JC Penney are having to declare bankruptcy because consumer behaviors are changing, and they can’t keep up, while companies like Walmart, that had infrastructures in place and moved quickly, have had greater success.”
New sources of information should be identified.
Companies need to incorporate new data and create new models to enable real-time decision-making. In the same way that many risk and financial models were rebuilt after the 2008 financial crisis, the use of data and analytics will need to be recalibrated to reflect the post-COVID-19 reality.
A focus should be placed on enhancing IT to reduce spending.
To successfully accommodate increased IT needs for their business, companies will be forced to greatly improve IT productivity to lower their costs. Where possible, IT costs will need to be variable to match demand.
In the current and post era of COVID-19, business models of old will need to be reimagined. Business will need to be conducted very differently on many fronts to succeed. And it will have to take place quickly to outperform competition. CS