This article reflects on five key challenges that will likely shape our world in the time beyond the COVID-19 pandemic. Leaders that are able to lift their heads above the day-to-day operational activities early on, who reflect on the new context and who act on risks and opportunities presented by the challenges, are likely to come out of this crisis more rapidly, more resiliently and more successfully than others.
As many leaders still have their immediate focus on survival and managing day-to-day operations, some are already reflecting on what the “new normal” might look like, once the worst of the pandemic has passed. The term “new normal” implies, that there will be a return to something like a “normal” state. Given the human and economic impact of the last few weeks and the fundamental changes they have brought, things will not simply return to the way they used to be. The speed and impact with which this crisis has redefined the way we work, communicate, consume, prioritise and view the world, will forever leave its marks and will confront us with a world quite different to the one we have once known.
1. The economic challenge: Save, reduce, cut, re-organise, re-prioritise.
It is undeniable that the world economy will take a downturn in the aftermath of this crisis as companies small and large have made significant, often existential losses.
Leaders around the world will need to focus on their costs, budgets, numbers and their bottom lines with incredible scrutiny. The drive to save money will be great, the willingness to spend rather limited. Everything that is not deemed essential is likely to fall victim to significant cuts, non-time-critical investments and purchases will be delayed and organisational inefficiencies will need to be addressed.
At the same time governments have made enormous financial commitments in an attempt to soften the blow to their economies. Their involvement and intervention are likely to lead to an increase in protectionism, regulations and scrutiny on spend in favour of that, which is beneficial for society, the domestic economy, the labour market, environmental protection and longer-term sustainability.
2. The social challenge: Handling the broad and sensitive people agenda
A look at the unemployment statistics in any of the impacted countries will reveal a sad story of mass layoffs, redundancies and working-time reductions as a consequence of the pandemic. For societies and regional markets this brings with it the risk of social instability, significantly reduced spendable incomes and less purchasing power.
Given the economic pressures and changes in demand, many companies will face a heavy people agenda, ranging from potential layoffs to re-skilling, re-locating or refocusing of staff on new priorities and tasks. How companies deal with their staff and address the social impact in the time of crisis, will determine how they are viewed emerging from it, both as a brand and as an employer.
3. The organisational challenge: Hybrid working models will change the way we work forever
During the past weeks, large parts of the global workforce have kept businesses functioning out of their home offices. “Work” is suddenly no longer a place to go to, but rather a task, a role, a value that one creates for customers, for peers, and for the organisation. With this shift, the definition of work has been fundamentally changed.
The last doubters, as to whether people can work effectively from remote locations, have now been silenced forever. Employees have quickly learned to take advantage of the digital platforms, apps and tools available for virtual work, communication and collaboration. The much talked about “new work” has been given a super-boost.
Though some will long to return to their offices, many will not want to surrender the newly found freedom, flexibility and autonomy, which the home office has given them. The answer for both could be hybrid working models. These models combine co-located and remote team members, in a way that suits the task at hand and the needs of employees, and pay dividends in many ways:
Agility, speed and competences - Hybrid working models fosters working across organisational boundaries, as they remove many of the limiting contexts of physical offices. Collaborating in smaller and more agile groups offers a unique opportunity to move towards a more competence-based way of working, bringing people with specific competences together for a specified period of time, irrespective of their place in the organisation. Proper empowerment of these groups will allow them to decide, move, learn and adapt quickly.
Organisation, skills and motivation - Companies should focus on (re-)designing their organisations, breaking up silos and developing the workforce’s ability to live “new work” effectively across traditional hierarchies. This includes building skills in self-organisation and virtual working as well as developing a culture that supports this way of working.
Inclusion – The model fosters inclusion by allowing those more remote or more flexible in their working arrangements to valuably contribute from wherever they are. In connection with this, it will be important to watch out for the typical risks associated with virtual work as trust, identification, visibility and motivation can suffer with a lack of personal contact.
Costs - Hybrid working models mean less daily travel time and serve to address the immediate, possibly longer-term travel restrictions. This will make costly business travel a lot less necessary.
4. The value challenge: Shifting business models, regionalisation and stronger contributions
One thing that crises manage to do, is to brutally expose the true nature of organizations, reveal who they really are and what values they truly hold.
Some organisations have shown up in amazing ways. In some instances, the crisis triggered a wave of unprecedented collaboration and a joint sense of purpose, in which producers, suppliers and customers around the world joined forces. Sports and fashion clothing companies changed their production to make face masks and protective equipment, snow machine manufacturers reconfigured their machines to handle large-scale disinfection, hotel kitchens catered for those in need and airlines flew goods and stranded nationals back home with voluntary crews.
Others made seemingly no difference. They withdrew, held onto processes, hid behind formal communications, gave no orientation and simply have no idea how they might play a valuable role in times of uncertainty and beyond.
At the same time, consumers have significantly changed the way they look at organisations. The shock at some nations’ and organisations’ inability to provide for their local markets sits deep. When supply chains broke and supermarket shelves were empty, consumers fell back onto local providers, who had been forgotten in the drive for low prices, high margins and globalization. A wave of sharing and solidarity washed across communities and a new togetherness emerged despite the distancing. The focus on “local and social buying” as well as on value creation and purpose have subsequently seen an unprecedented upswing.
Therefore, the way in which leaders and organisations act in and beyond the crisis, will determine how they are seen in the years thereafter. While it will be essential for leaders to regain strong balance sheets, other factors such as environmental, social, political and health considerations as well as overall purpose, meaning and value contributions will play a much larger role for consumers, shareholders and employees alike. The notion of the triple bottom line: Profit, people, planet (John Elkington, 1994) is here in full force.
Companies will need to rethink their business models, review their geographic footprints, reduce the risk within their supply chains and bring sourcing, production and logistics closer to the end markets. They should look at the opportunities created by the shifts (contact free, automated, digital) and rethink their value proposition to customers. “Nearness”, trust, meaning and a joint contribution to a greater good are a more valuable part of the customer experience than ever before.
5. The leadership challenge: The new “leadership normal”
The turbulences of the crisis have broadly instilled a sense of fear and uncertainty among many. Addressing the emotional needs of people as well as the changes ahead will require a lot from leaders: authenticity, empathy, emotional intelligence, visibility, trust, transparency, empowerment and benevolence; qualities, that leadership development experts have been propagating for years, if not decades. The difference going forward is that leaders, who do not demonstrate these characteristics, will simply no longer be accepted or tolerated. Neither by their employees, nor by their shareholders.
The journey to the “new normal” will require all of these traits along with a good dose of role-modelling, compassion and patience, as people and organizations adapt to the new context.
In conclusion
The five challenges outlined in this article reflect a personal view. What this means for your organisation will vary depending on the industry you are in as well as the agility and speed with which you can help your organisation respond to the pressures and seek out opportunities in them.
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