In the post-pandemic world, people and society will seek a new equilibrium. Even though we are unable to predict how this ‘next normal’ will impact businesses, that doesn’t mean we shouldn't prepare for it.
In this #AENextNormal blog series, we discuss how people and society will seek a new equilibrium and what companies will need to undertake to navigate out of the crisis and find their new position in the 'next normal'. In this blog, we'll zoom into the why and how companies will need to revisit their strategy.
Organizations are all navigating through the same storm, but not in the same boat
In order to define the way forward, it is imperative to know your starting position. Digital companies with balanced portfolios and sufficient financial reserve are coming out stronger. Companies seeking for the extremes without safety net are heavily impacted when their basic assumptions prove invalid. Some companies will get the fatal blow, some have to recover, others thrive like never before.
The corona crisis amplifies the vulnerability of the economic system and businesses in particular. While we cannot predict events that will cause harm, we can address our sensitivity to harm. This is called risk management with the ultimate goal to become more resilient, or ‘antifragile’ (Taleb).
Risk is not negative. It is inherent to business. Risk and opportunity are two faces of the same medal. Risk management is at the heart of any good strategy. Risk management has basically to do with:
- avoiding vulnerability
- strengthening your capability
- anticipating opportunities and threats
Old wisdom would say: “don’t put all eggs in one basket”, “a bundle of twigs is stronger than one branch”, and “prevention is better than to cure”. In business, we put more expensive wordings in the corona change agenda.
On business level, it is recommended to identify all single points of failure and find alternatives through diversification in the business model and redundancy in the operating model. In other words, companies focusing on performance management, weeding out every inefficiency, will shift attention to risk management and foresee fallback options.
On organizational level, companies should build in flexibility and resilience. We expect a move on the micro level towards agile, self-empowered teams that can swiftly respond to local challenges and opportunities. Also on the macro level, we anticipate alliances, new partnerships, mergers, if not acquisitions. (bundle of twigs is stronger than one branch)
On technology level, companies should embrace digital technology to guarantee a safe and secure work environment in the first place. Data science in addition helps to make business smart: future opportunities and threats are anticipated through predictive modeling and real-time monitoring of leading indicators. One of the best known examples being fraud detection.
Leading companies have been doing this for years. Walt Disney’s losses in theme parks during lock down are compensated by their streaming services on their tv channel. Kinepolis Group strategy balances short-term incomes as cinema operator with long-term investments in real estate. The word ‘risk’ appears 151 times in the Kinepolis Group Annual Report of 2018.
Embrace the Next Normal
To navigate out of the current crisis and accelerate towards your future, you'll have to embrace the Next Normal. Grasp this moment to revisit your strategy, invest in the capability to change and accelerate digital business with human technology.
Are you ready to flourish in the era of transformational excellence? We'd love to discuss where we can be of help! Don't hesitate to contact us.