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COVID-19: Managing Through, Exiting Stronger


covid-19-managing-through-exiting-stronger

COVID-19 is a before-and-after moment in the history of the economy and society. The pace of decision making is unprecedented and navigating the financial and operational challenges are daunting. To minimize business disruption and protect employees, leaders are taking steps to address the challenges of this new reality.

Think of the current situation as a pressure test for the fitness of your business, and an opportunity to come out of this challenging environment stronger while staying lean. Perhaps the silver lining for companies in the age of COVID-19 will be this: forced change can be positive.

In recent conversations with experts and clients on how they are responding to the crisis, we’ve noticed companies are focused on three key areas: business continuity, managing costs, and exiting stronger.

Business continuity

“How do we keep the lights on?”

We’re all facing a new balancing act: Determine what’s best for our companies and protect our employees while delivering the best possible experience to customers. While remote work is more commonplace now than it was a decade ago, 49% of US citizens have never worked from home.[1] Thanks to technology and worldwide shelter-in-place mandates, millions of people are now participating in what Time magazine calls “the world’s biggest working-from-home experiment.” This is already producing new challenges in productivity, business continuity, and security, especially for organizations that rely on offshore teams.

Keep your supply chain moving – One of the most challenging events to recover from will be supply chain disruption. Ensuring clear lines of sight and communication channels are likely top of mind within critical supply chain areas. Addressing contingencies and mitigating supply chain disruptions is critical.

  • Reevaluate sourcing strategies – identify potential weaknesses and alternative supply scenarios and evaluate what these mean for operations and business continuity.
  • Explore new tools and technologies that enable a distributed workforce and greater intelligence to supply chain flows.
  • Add flexibility to value chains quickly by filling labor and supply chain gaps with partners and prioritizing goods and services to customers.

Maintain Operations – COVID-19 will have prolonged impacts on the way we work and on how we grow. Now is the time to prepare for operational resilience by identifying friction points, prioritizing planning, acting to derisk across the value chain, and staying flexible.

  • Monitor IT and security infrastructure to guard against strain and external threats.
  • Lean on automation where possible to focus workers’ attention on nonroutine, high-value tasks.
  • Scale digital architecture to support business operations and increased demands for digital channels.[2]
  • Review cloud strategy for opportunities to better support your customers and workforce.
  • Host operational roundtables with customers and partners to keep an open dialogue and share best practices.

Prioritize Critical Initiatives – In this high-stress situation, the instinct is to think about which programs to cut and revert to old ways of working. And while it is essential to reevaluate priorities, shift resources, and track progress closely, it is also crucial to stay the course on key priorities.[3]

  • Take a through-cycle view of your business and commit to transformation goals that won’t impair your ability to make it through the business crisis and provide better continuity, such as programs focused on data analytics or cloud migrations.
  • Double down on agile processes. Working in shorter cycles means you are better able to evaluate projected outcomes against delivered outcomes quickly and respond faster to changing conditions.
  • Take measures to ensure the tools you use, such as video conferencing platforms, are secure, especially if you are having sensitive conversations. Zoom, for example, made the news for running data through servers in China.
  • Mitigate the risk of offshore IT and BPO disruption by seeking alternatives such as nearshore teams and digital solutions.

 

Managing Costs

“How can we tighten the belt with minimal impact?”

The business impact of COVID-19 has imposed significant constraints on cash and working capital, requiring businesses to cut costs, particularly in the short term. Facing uncertainty about revenue, profit, and cash flow for the next several months or longer, consider the following actions to help manage costs:

Assess discretionary spend – As economic activity continues to slow and shut down many areas of production, insight can be gained on what is truly needed versus nice to have. This will help you re-examine which costs are fixed and which are variable. That includes:

  • Evaluate fixed capacity that is not currently being used and deprioritizing non mission-critical initiatives.
  • Adapt existing products to the current needs of the business or your customers to minimize losses, optimize value, solve customer problems, or gain market share.
  • Analyze cloud usage and optimize systems and applications for efficiency. This will provide the flexibility to manage changing employee and customer needs rapidly and cost-effectively.

Ask partners for help – Protect the future of your business by nurturing your important vendor and commercial relationships. By preparing now, you can avoid future potential contractual challenges or contentious scenarios while still supporting cash flows.[4]

  • Maintain transparent and frequent communications with your suppliers, customers, and vendors.
  • Negotiate flexible financing or extended payment terms with lenders.
  • Leverage cash tax strategies and government incentives.
  • Establish peer-to-peer touchpoints between IT and LOB leaders.

Invest wisely – By accurately prioritizing investments and optimizing existing resources, you can respond to the ongoing crisis in a strategic way as opposed to ad-hoc cost-cutting.[5]

  • Identify ways to drive productivity to help mitigate downturn impact. For example, to encourage virtual workforce productivity, consider right-scaling infrastructure capacity, adopting easy to use collaboration tools, or increasing your use of bots and AI for customer service inquiries.
  • Keep your transformation projects on track. By continuing to invest in next-gen technologies and frameworks such as machine learning, automation, and agile, you will help your business survive the short-term and thrive in the long-term.
  • Consider alternate revenue streams such as leveraging your data or shifting teams to solve immediate customer problems, or create new platforms and LOB offerings.

Understand cash flow – Now is the time to assess and test all incoming and outgoing cash flows so that you can take measured actions to protect and improve your position.[6]

  • Improve cash flow by optimizing working capital and identifying quick wins that can deliver rapid cash flow, such as minimizing non-essential outflows or right-sizing inventory to sales.
  • Continue to identify the financial and operational levers that can be pulled to conserve cash or increase funding.
  • Create multiple action plans based on a broad range of scenarios if revenue does not rebound as initially anticipated.

 

Act Today, Impact Tomorrow

“How do we come out of this stronger?”

The COVID-19 pandemic has put us all in a position to be open to learning every day. As one CIO said, “In the rush to return to normal, use this time to consider which parts of normal are worth rushing back to.”

By leveraging the knowledge and experience gained from this unique challenge, you can build value throughout your organization and emerge stronger and wiser. The following steps will help you plan your future rebound and growth strategies:

Learn from the past – Post-crisis, an objective assessment will help identify opportunities for improvement. When conducting this review, the following questions are key:[7]

  • What was the impact of COVID-19 on your people, assets, reputation, and partners?
  • How effective was your company’s response? How can you improve your response in future emergencies?
  • How can you take these lessons learned to enhance your overall organizational resilience?

Leverage the present to prepare for the future – Once the COVID-19 outbreak is contained, companies will need to prepare for a “new normal.” Will you be ready to take the lessons learned and integrate them into your business for the post-COVID world? Many of your current tools and processes will likely become sources for the next innovation:

  • Organizational Resiliency: Guard against supply chain and value chain uncertainty by engaging and managing a diversified and flexible set of partners and providers. Cost savings and value-added services may also be realized as new partnerships continue to evolve in times of growth.
  • Remote Work: Create a structure and leadership support to maintain team member comradery and connection to the company culture. Continue to evaluate and expand efforts where efficiencies in productivity have been gained along with monitoring the security and viability of the tools used.
  • Technology & Automation: Prioritize projects by the impact on the business with ROI roadmaps and build a framework to leverage your cloud infrastructure and automation to maximize the value added by your workforce. Continue to seek ways to increase efficiencies leveraging any incremental improvements that started during this crisis.
  • Responsiveness: Note how your organization and teams have adapted to the new normal. Where can you adopt or expand agile practices? Post-crisis, continuing to embrace the iterative nature of agile will yield additional clarity and drive faster more transparent results.
  • Innovation: The mettle test we are going through is grounds for creativity and new ideas. Enable your teams to problem-solve and embrace open collaboration with customers and partners to quickly adapt to the new normal and seek new opportunities.

 

Conclusion

We cannot be one hundred percent certain how our world is going to be transformed by COVID-19. We do know there will be new expectations, new processes, and new business models. The actions you take now to be more secure, stable, and agile will lead to your organization coming out of this poised for growth. Identifying and maximizing the benefits for your company and your customers will require executive understanding and action plans to drive continued success. The goal is to emerge not having just “managed” the crisis but to become stronger because of it.

[1] Laura Quiambao, “Ready or Not: Are Employees Ready to Go Remote?”, Wrike.com, March 17, 2020
[2] Kevin Ji, Tao Wu, Henrique Cecci,”Limit the Business Impact of COVID-19 Coronavirus Outbreaks by Improving Infrastructure Resilience,” Gartner, March 17, 2020.
[3] Aamer Baig, Klemens Hjartar, and Steve Van Kuiken, “The CIO’s moment: Leadership through the first wave of the coronavirus crisis,” McKinsey, March 2020.
[4] Resources for resilient leadership, Deloitte, retrieved April 20, 2020.
[5] Henrik Nilsson, “How can businesses manage technology costs during the Covid-19 crisis?,” Information Age, April 6, 2020.
[6] Managing cash pressures due to coronavirus disruptions, PwC, Retrieved April 20, 2020.
[7] Reflect on lessons learned and share best practices, Deloitte, Retrieved April 20, 2020.

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