As the UK lockdown took hold in March 2020, the economy faltered, businesses evolved, and the virtual workplace became the norm for millions. Six months later, we consider what we have learned through our diverse industry experience and insights. In our recent cross-sector webinar, we asked our clients three questions to understand their experiences, and applied them to our five prevailing transformation themes.
We have supported clients in all sectors to respond to the pandemic and deliver strategic change. This has included significant transformation initiatives, rapidly redeploying to meet the needs of critical public programmes, embedding remote working capabilities and technologies, and implementing effective governance to build resilience and drive delivery at pace. We have seen first-hand how the five key themes guide the response to COVID-19 and future planning.
In our recent Virtual Knowledge Exchange with senior business leaders, we asked our audience three questions:
- Is your organisation taking steps to retain or rethink changes to your workplace that resulted from COVID-19 for the long term?
- Is your business planning to increase investment or to cut costs in the next 12 months?
- Of the six digital and technology trends discussed, which one is going to represent the biggest impact for your business?
The results are discussed within the prevailing transformation themes below.
1. The Transformed Workplace (Link)
COVID-19 will have significant and lasting implications for ways of working. Many organisations transitioned to remote working within weeks when lockdown was announced. Several months later and faced with ongoing social distancing restrictions, organisations have seen that a large proportion of workforce activities can be performed remotely. More than 60% of employees worked from home during lockdown, in some cases up to 100%.1 Diverse organisations have since announced that employees will not be required to return to the office into the long term, including Schroders, PwC and Google.2
In our knowledge exchange, we found that 100% of organisations were actively planning to make changes to their workplace as a result of the pandemic and 72% were planning to rethink their employee propositions, policies and structures. Significantly, no organisations were planning to revert to pre- COVID-19 ways of working.
Elements of the virtual workplace are likely to remain as the workforce demands flexibility and work/life balance, whilst CFOs consider the possibility for cost-savings through a reduction in office space. An independent survey of 500 business leaders commissioned by property development firm Accumulate Capital found 73% expect to downsize commercial space following the pandemic.3 Despite this, in the last six months many have acknowledged the importance of face-to-face human interaction.
Organisations can therefore expect a hybrid virtual-physical workplace, at least in the short term, which may also move away from traditional working hours. This has implications for organisational culture, productivity, wellbeing and diversity. New initiatives will be needed to bring together colleagues working in different ways, for example, by transforming the office into a dedicated collaboration space or by connecting people via virtual events. Organisations that do this well will inspire employee engagement and loyalty.
2. Reimagining your Business Model (Link)
COVID-19 has created opportunities for organisations to reimagine their wider business model, from their strategy to propositions. The business model of the future must have flexibility at the core, in the form of shorter strategy cycles, less onerous governance, more efficient processes and a continuous improvement mindset.
Ultimately, the reimagined business model must deliver against customer needs and expectations. As circumstances change, customers will interact with products and services in new ways. For example, having first experienced dramatic declines in customer numbers and a shift to food delivery models during and following lockdown, restaurants participating in the ‘Eat Out to Help Out’ scheme have seen a dramatic resurgence in demand, serving 35m meals in two weeks.4 We’ve seen customers panic-buying basic commodities, queuing at DIY stores and demanding enough bicycles to leave retailers out of stock until 2021.5 The next trends remain to be seen, but are likely to reflect customer concerns for safety, space, hygiene and quality. The business model will need to monitor these changing customer needs and drive product and service innovation and delivery at pace.
Private and public sector organisations will also need to work within a changing political and economic landscape, which will be further complicated by Brexit, the US elections and future waves of COVID. Our knowledge exchange attendees discussed the challenges of responding to rapid changes in government guidance and the paramount need to ensure customer safety. For some, there was a greater willingness to work with competitors to shape the response of the wider industry. For others, there were new concerns, such as protecting sensitive customer data gathered through contact tracing. Still others were rethinking global recruitment approaches and considering a geographically-agnostic model to source future talent. In each case, greater insight and creativity are needed to critically assess potential business models and respond with agility.
3. Digital Transformation (Link)
The last six months have reinforced that technology and data are critical enablers for all organisations. The deployment of business continuity plans and shift to virtual working has identified weaknesses in legacy infrastructure and technology. IT leaders should use recent experience as a springboard to invest in reliable technologies that unlock constraints, such as cloud-based software as a service or robotics process automation. Flexibility, scalability and accessibility of solutions will be increasingly desirable to improve digital resilience and support long term growth. IT investment may also unlock efficiencies, reduce cost to serve and enhance customer confidence.
A combined 61% of our knowledge exchange attendees believed that digitally enabling the customer and digitising the workforce would have the largest impacts on their organisation, alongside other digital and technology trends such as artificial intelligence and adaptive technology.
To digitise the workforce, organisations must provide fit for purpose hardware and software that empowers employees. Collaboration tools such as MS Teams, Mural and Zoom will continue to be critical in a virtual-physical world. In April, the number of people attending Zoom meetings on one day peaked at 300 million, approximately the same number as the US population.6,7 Adapting to new ways of working has revealed opportunities to automate processes to reduce risk and drive efficiency and effectiveness. As organisations look beyond COVID-19, the application of advanced technologies including artificial intelligence and machine learning to augment the human workforce will be a focus area. Blending people with technology will release human capacity for strategic and creative activities, which will be critical as we shape the post-pandemic world.
To digitally enable the customer, organisations will look to elicit deeper insight from data to understand customer requirements and create tailored products and services. Customers increasingly expect high quality and frictionless experiences, which may no longer require face-to-face interaction. This opens up new possibilities for customer engagement, as well as new challenges, such as rising demand for home delivery. There will also be new forms of competition between virtual and physical providers. For example, after months of cinema closures, Disney made the controversial decision to bypass cinemas and offer its latest big budget film Mulan directly to streaming subscribers.8 We can expect similar digitally enabled direct-to-consumer options in the future.
4. Operational Efficiency (Link)
COVID-19 has exposed and exacerbated operational inefficiencies within organisations and suppliers. Future transformation of the operating model must leave the organisation with effective structures, tools and capabilities to adapt and grow in uncertain times.
67% of our knowledge exchange attendees were planning a combination of increased investment and increased cost-cutting in the next year, whilst a further 22% of organisations were looking to increase or significantly increase investment. These investment decisions will need to be carefully considered in the context of recession, with the UK economy shrinking 20.4% between April and June.9
The drive for operational efficiency cannot only focus on costs. Organisations must also improve enterprise agility, build employee capability and embrace transformation. They should prioritise identification of the existing processes, capabilities, delivery models and suppliers that bring the most value to the organisation, as well as alternatives that will enhance and strengthen future ways of working. This will require collaboration at all levels of the organisation, as well as with external partners.
An ongoing area of focus will be the supply chain. At the start of lockdown, Jaguar Landrover was forced to fly Chinese-made parts in suitcases,10 but within a short time was using advanced graph analytics and relational databases to understand what could be made from the parts available11. Elsewhere, our telecoms clients were under pressure as network demand surged by more than 50%, before being hit by the UK ban on use of Huawei kit.12 These examples demonstrate the importance of a strong, flexible supply chain to enable future business continuity and responsiveness.
The past months have also highlighted the benefits of making incremental improvements, rather than waiting for a detailed strategy or operating model refresh. Changes must be considered holistically to ensure the full range of opportunities are identified and to avoid causing the organisation further stress. Having a clear transformation strategy and benefits will galvanise the organisation to support change.
5. Speed of Transformation (Link)
COVID-19 has forced organisations to transform at a pace that would previously have been inconceivable. In many cases, organisations have been surprised by the ability of their teams and processes to adapt. Sectors that were traditionally slow to change, such as healthcare and utilities, have seen an increasing acceptance and demand for new solutions. For example, the number of virtual GP appointments more than tripled since the outbreak began.13
The last six months have seen a rapid acceleration of trends building throughout the last decade, alongside new and complex challenges. The key drivers of accelerated transformation are customers, leadership and employees, as well as market forces. We have seen a renewed focus across our clients on overhauling outdated approaches, driving delivery through agile methods, reviewing outputs of multi-year change programmes and identifying digital tools that enable agility and automation.
Companies and leaders that are innovative and forward thinking will find new ways to work smarter and faster as change accelerates. For example, online supermarket Ocado experienced a ten times increase in demand during lockdown, accompanied by a 50% growth in average order size.14 They were forced to rapidly implement virtual queuing, prioritise delivery to existing or vulnerable customers and even suspend service.15 However, equally rapid adaptations enabled them to respond to demand, such as suspending delivery of mineral water, which released capacity to deliver to 6,000 additional households each week.16
Looking forwards, organisations can establish key enablers to keep pace with the increased speed of transformation. Examples include implementing new technology foundations and tools to deliver transformation, or methods and governance that allow faster decision making. Keeping pace will be enabled by establishing a culture that embraces change, underpinned by empowered employees and innovation.
“There are decades where nothing happens, and there are weeks where decades happen.” — Vladimir Lenin
Experiences of working with leading organisations in all sectors to deliver COVID-19 responses and strategic initiatives has put a spotlight on agility, acting courageously, turning strategy into action and delivering change. We believe the focus areas for all organisations should be: transforming the workplace; reimagining the business model; embracing technology; streamlining operations and adapting to the increased speed of transformation. Our detailed theme and sector-specific perspectives are available on our COVID-19 page and LinkedIn page.
As we transition into Autumn, we will introduce the Barometer on Change, our flagship report which explores the challenges organisations face when implementing change. The report is supported with findings from a survey of 500 business leaders.
In our last report, we examined how organisations can respond to the increasing pace of change by practising courageous behaviour, demonstrating organisational agility and nurturing talent at all levels. The full report is available on our website.
This year, we will be examining how organisations can navigate complex and interconnected change by remaining true and authentic to their purpose, connecting with their stakeholders and empowering their people. Further details will be published on our website and social media in the coming months.
For more information please email firstname.lastname@example.org