2020 added a whole new dimension to business agility and resilience. The advent of an unprecedented crisis led many companies to leverage industry 4.0 technologies to ensure business continuity. In 2021, as many countries are grappling with the second wave of the pandemic, the focus has shifted to teams and people apart from technological adoption. The challenge for many organizations, today, is to ensure that the agility and resilience that they unlocked during the pandemic remains sustainable.
Organization’s are focussing on removing bottlenecks while also focussing on the mental health of their workers. For many organizations, the storm hasn’t quite passed over and 2021 brings with it a whole new slew of challenges. Based on insights from McKinsey, let’s take a look at some of the key priorities for businesses in 2021.
Anticipate demand shifts
Today, there are many countries that are grappling with the second wave of the COVID-19 pandemic. In stark contrast, some regions have handled the pandemic response well, inoculated most of their population like Israel, and have restored some semblance of normalcy. Depending on the idiosyncrasies of a region, both business to consumer (B2C) and business to business (B2B) companies shall see the demand dynamics change. This will have a long-term impact on their business model. The various lockdowns have led to many households focussing on prioritizing essentials over other commodities and services. Once some semblance of normalcy returns, there could be a spike in spending on services, electronics, and other non-essential commodities.
There is still a need for clarity about which services will be in demand. For instance, the lockdown led to an increase in the demand for streaming services, meal-delivery, and video games. It remains to be seen if these preferences shall remain for the long-term. Businesses can employ detailed consumer segmentation and real-time demand analysis to garner a better understanding of the market.
Emphasize health and productivity
As per a recent report, approximately a third of the employees in the APAC region and 75 percent of the employees in the US experienced symptoms of a burnout. There is a pertinent need for business leaders and managers to exercise empathy to unlock the true potential of their workforce. A survey of 2800 workers by a staffing firm highlights that a transition to remote-work has led to 70 percent of professionals working on weekends, and 45 percent highlighting that they put in more hours during the week. Contrary to popular opinion, remote-working has increased productivity but there is a need for a better work-life balance. A willingness to change how people work has a drastic impact on productivity: Multiple quick meetings of 15 minutes led to a drastic increase in productivity by 67 percent of the organizations surveyed by McKinsey. An employee’s sense of belonging tends to have a profound impact on the employee’s productivity. Which is why company’s today need to focus on inclusivity to unlock the true potential of their employees.
Re-think Capital allocation
Based on data pertaining to how trends would play put over the years, capital was allocated to suit anticipated business needs. However, in the present times of high uncertainty, a new approach is required: Companies ought to focus on building value by pivoting through the rapid pace of disruptions that can happen over weeks or days. A 2020 analysis by McKinsey revealed that companies who pivoted through the disruptions to view the crisis as an opportunity to create value had a veritable edge over their competitors. These companies struck a balance with capital allocation across margin, optionality, and growth than the companies that only focussed on a specific dimension. This ability to navigate business disruptions with a balanced approach to capital allocation is an edge that is likely to remain with the companies even after the pandemic ends. How companies manage capital allocation for portfolio reallocation, divestitures, and M&A shall have a tenable impact on their overall business performance in an era of constant disruptions.
Business leaders need to ask the right questions and prevent burnouts just because there is an increased emphasis on speed today. Making deep-seated changes to a business also needs profound introspection of the key elements and the fundamentals of a business. The various challenges today are also an opportunities for companies to innovate and imbibe a greater degree of business agility.