Operations will be noticeably different in the post-lockdown era, freed from the constraints of co-locating workers in physical proximity, and in many cases more physically distant from their customers. However, in the near term, the path is likely to be a bumpy one.
The phrase ‘the new normal’ having been coined in the aftermath of the 2007 financial crisis has gained currency again in recent weeks. The implication being that once restrictions on both the physical interaction of people and on the ability of businesses to trade freely have eased, things won’t quite go back to being how they were before. According to Yuval Noah Harari, writing in the Financial Times in late March, such societal crises ‘fast-forward historical processes’. The direction of travel may be (more or less) unaltered, but its pace becomes discontinuous and disruptive.
A need to reinvent
The cultural, societal and economic impacts will probably be significant. It is almost certain that your ‘new normal’ customers will not buy the exact same things from you, in the same quantities, in the same way. For evidence of this, we only need look back to the SARS outbreak, which is widely cited as a key factor in the growth of e-commerce in China. The effects of constricted trade and any subsequent economic recession may well change the competitive landscape irreversibly. Established players will disappear, and new innovators will emerge. These will typically have business models that do not need huge volumes to sustain them, allowing them to cherry-pick the most profitable customer segments. Every existing business will probably have to reinvent itself to some degree.
New ways of working
You and your co-workers are probably different too. A prolonged period of home working will have opened the eyes of many to its benefits – better work-life balance, hours freed up from the daily commute, the ability to focus and prioritise without casual distractions from bosses and co-workers. There are obvious difficulties too, such as the loss of richness of information and cultural togetherness. Nonetheless, the genie is well and truly out of the bottle and home working will inevitably become, if not the norm, at least normal.
BAU, currently largely focused on the performance of overhead heavy, physical sites, already looks very ‘old normal’. The inherent resilience of networks of dispersed people and technology is a compelling and increasingly attractive operating model proposition. The efficiency benefits of scale remain but divorced from the constraints of a common geography.
Opportunities emerging from change
Whilst this is a potentially significant change, it is a journey that many companies have been forced to go on in recent weeks. Some will retrench, others will embrace the it. For some, it could be their saviour if they are brave enough. For example, organisations with a significant high street presence, having proved that their mid- and back-offices can function without staff being in a central location, might be able to disperse activities across their branches, making those locations viable, maintaining a valued customer service and protecting their brand and reputation.
Those existing businesses that continue to succeed will undoubtedly exhibit the following characteristics:
1. A genuine proximity to their customers and staff
Whether relationships are face-to-face or remote, these companies will invest the time in listening to and understanding human needs, share their values and align their ways of working and the experience they deliver.
2. Management by effective performance dialogue and a shared sense of contribution
Free from the illusion of control given by physically locating managers with their teams, they will deliver performance by having a clear vision and an engendered sense of how every role contributes to its attainment. This will be backed by regular, structured and holistic performance dialogue from the front-line to the boardroom and back.
3. An efficient operation with the flexibility to adapt
Staff will be focused on the activities that add most value to customers and can best be done by other humans. The routine, unseen or unnecessary will be eliminated, automated or performed with maximum efficiency.
Although these characteristics are nothing new, the new normal gives them a new imperative and indeed make them critical to survival rather than merely aspirational. Many companies that were previously well set-up will need to quickly adapt.
Challenging times ahead
All this is well and good, but the short-term economic outlook is challenging. Organisations facing revenue loss and increased risk of bad debt will be forced into defensive mode to protect revenues and cash flows. Projects and investments will be put on hold or abandoned. More than ever this is time for those leading and managing operations to keep a level head.
Organisations looking to reduce the impact of this disruption will need to:
1. Control the controllable
Establish a task force to understand near term impacts and manage through (and out of) them.
2. Take time to take stock – but not too much
Understand what has changed permanently and what has stayed the same, avoid over – or hasty – reaction, but avoid denial too. You will also need to build a robust plan to sustainably transition to your new normal.
3. Stabilise the operation
Turbo-charge your operational practices, particularly demand forecasting, capacity planning, resource flexing and intraday management routines. Focus on improving processes and operational routines which preserve or accelerate cashflow.
4. Build resilience and flexibility
Optimise processes, use automation technologies where appropriate, broaden skillsets, sharing work in ways that maintains competency in them.
5. Embrace the ‘new normal’
Transition your business to the new normal.
We’ve been here before
Whilst the causes of this period of disruption are unprecedented, many of the implications are familiar. The 2007 financial crisis forced banks, in particular, to re-assess their operations, mobilising operational excellence (OpEx) programmes across their middle and back office functions to drive out waste, reduce overheads and re-focus their efforts on understanding and better meeting the needs of an increasingly demanding and hostile consumer base.
Many of the lessons learned then, will be applicable now.
About the author
Ian Gill – Associate Director, Technology & Management Consulting, RSM
Ian’s expertise lies in process improvement, operational management best practice and operating model redesign and has been gained across a range of service industries, notably banking and insurance. He has worked extensively in the UK, USA, Asia and the EU for both national business and large multi-nationals. His experience and client-first approach enable him to get right to the root causes of operational challenges and work with clients to design practical changes, gain ‘buy-in’ and make rapid, tangible and sustainable improvements.
RSM is a leading provider of audit, tax and consulting services to middle market leaders, globally, with a breadth of capability that will help organisations overcome their immediate challenges and build a successful ‘new normal’, including: Change and Transformation consultancy, that will aid with the creation of task forces and central co-ordination to manage through the immediate challenge and a business improvement practice led by those who have been through disruptive times and understand where best to focus.