Just a few weeks ago, we were shutting down business operations and mothballing core assets.
By Vukani Mngxati, CEO of Accenture in Africa
Now, at an unprecedented speed, as South Africa has moved to alert level 3 of our national response to the Covid-19 crisis, companies are being asked to restart their engines, to quickly bring national economies back online.
The challenge is complicated by uncertainties about how the pandemic will progress, and the social, political and fiscal actions that it will drive.
Based on our analysis of how this has unfolded to date, in South Africa and in the rest of the world, we at Accenture believe that we can expect four potential scenarios for the evolution of the pandemic, which each poses major risks and a number of possible implications.
As our country will most likely traverse across these potential scenarios in a w-curve, there are five key steps that business leaders need to take now, to build the competencies to navigate through uncertainties, whilst getting their businesses future-ready.
We could see a quick rebound because of rapid remission, where the disease is contained, life returns to normal swiftly and government measures work quickly to stabilise the economy. A too fast restart can however lead to catastrophic success which includes: unfulfilled demand and labour shortages, social unrest due to the demand for fast openings, customer and employee disregard for social distancing and other restrictions and testing.
This potential scenario envisions a measured approach, with reopening taking place over months, as opposed to days. This poses the major business risk of fast-moving competitors stealing the market share from incumbents, as well as three main possible implications such as a slow return previous levels of demand, opportunities for customers to switch to alternative suppliers and great pressure to not disappoint loyal customers.
With the coronavirus still circulating, the possibility of recurrence will remain high and such cyclical outbreaks may in turn require higher alert levels of lockdown to be rapidly reinstated. This will serve to control infections in past locations, but the virus could spread to new hot spots and rebound in the previous ones. Society’s patience will in all likelihood wear thin with social distancing opening societal fissures. For business, there will be four predominant implications; namely: unprecedented supply and demand volatility, inability to plan inventories, labour scheduling, deep employee and customer discouragement and business planning chaos.
Whilst hoping for the best, businesses should prepare for the worst-case scenario, which is a period of prolonged chaos, during which we may be swamped by people eager to get back to work despite continued risks. In this scenario, effects to control the virus will seem useless and governments and societies may be strained to the point of breaking.
The economy will most likely be limited to necessities only, and inflation will soar. The major risk for businesses under these circumstances will be revenue and profit failures which will lead to debt crunch and complete business collapse.
Potential implications include:
- Lack of revenues and high costs that hinder investment in reopening;
- Opening efforts may distract from longer term planning needed for a long lasting financial/business crisis;
- Entire categories/industries may remain collapsed and be unlikely to return to business in their old form;
- The mental health toll on workers will hinder employee engagement.
Navigating through scenario uncertainties
Given the range of potential scenarios for the evolution of the crisis, businesses will need to be prepared to change course on a dime. Any steps that are taken to reopen, should therefore be easily reversible and scalable.
While they mitigate immediate challenges, employees are likely to be concerned about the prospects of physical interaction while the virus is still circulating, which may result in a trust deficit. Such a trust deficit will be challenging to counteract, and it may have a substantial negative impact on productivity and efficiency. Businesses will therefore need to ensure that they provide a safe and secure work environment, communicating with their workforce transparently to build trust.
Businesses should avoid the temptation to reopen by reverting to old ways but embrace the chance to build a better future instead. By now, employees would have already adapted to new ways of working, some of which they may prefer. New processes and capabilities are a stepping stone to longer-term business transformation. Businesses who are for example able to establish a remote workforce, could consider the notable business value of virtual operations and opt to move away from brick and mortar all together.
Goodbye reopening, hello reinvention
Reopening should be more than a restart. It should usher in a new era of business. The rules have changed. Employee and customer behaviours have changed, but this creates new opportunities for businesses with the courage and foresight to change more than what immediate needs demand.
Those that can reinvent themselves – their processes, customer experiences, employee and social contracts, and do so in ways that further their purpose – will win. Ultimately, outmanoeuvring uncertainty – by mitigating immediate challenges and building a better future – will create businesses who will one day look back on the crisis as the darkness before the dawn
Not just a (re)opening, a new beginning
The reopening provides an unparalleled opportunity for businesses to create a better future for both employees and customers, and in a manner that serves all their stakeholders.
This can be done through an active reinvention programme that addresses the following five key areas, to outmanoeuvre uncertainty:
- Put people first – Knowing what is really going on in the lives of employees is essential to creating the next generation successful business. Technology, processes and employees will need to become even more truly human in how they interact with people. It starts with responsible leadership.
- Design spaces that work – Companies must create a safe working environment that gives people confidence to return to work premises and to adjust to the new virtual / physical hybrid way of working. Support for employee well-being and mental health is a priority. The future workplace will also need new approaches to security.
- Solve in phases – The reopening is just the start. Companies should plan for a phased return that responds to unforeseen events, slippage, and reversals. Companies should see this not as a time to return to “normal”, but an opportunity to rethink, reengineer and improve future operations.
- Commit to elastic cost structure – Having secured short-term liquidity, companies will need to focus on the longer-term financial health and affordability of the business. That means moving from rapid cost reductions to building a resilient cost management mindset, and from balance sheet protection to long-term investment. Moving beyond merely creating ecosystems to forming powered networks through symbiotic partnerships and alliances will be crucial for enabling lean operations with the capability to fast-track optimal growth with minimum resources.
- Get future-ready – The secret to the long-term success of reopening lies in building new capabilities: fresh approaches to innovation, supported by accelerated digital transformation and more holistic technology strategies that support innovation at scale. Purpose, empathy and agility must be at the centre of new customer growth opportunities.