The Need for Speed
Quick, what do the following organizations have in common: Hertz, Neiman Marcus, J.C. Penney, Sur La Table, J. Crew? Answer: None of them—not a one—were able to pivot fast enough to survive the pandemic.
Hard to say which company will fall next. In the next normal, all organizations are being asked, no forced, to re-examine how they’ll operate going forward. To make things even more complicated, the environment that they’re operating in and need to plan for, is constantly lurching this way and that—which makes the challenge of rapidly adapting even more difficult.
Read on, as we explore the various pivots enterprises must make in order to mitigate risk and ensure a successful operating model to move forward in the post-pandemic world.
It’s a whole new market. Organizations need to embrace a level of adaptiveness that they may have never envisioned, embraced or enabled before. “Sitting ringside at a change that is about to unfold can give you tremendous insight into what actions to take now, before the outcome is obvious to everyone,” writes Rita McGrath, Columbia Business School professor, in her book Seeing Around Corners.
Businesses today have to consider, in a most serious way, Joseph Schumpeter’s concept of creative destruction when exploring new market opportunities and business models. They need to see that new business models may inherently contradict or destroy current models in place as of today. In all likelihood, current market conditions will force this perspective on organizations.
This may mean that current cash cows will need to be looked at in a new way. In the quickened market, businesses may wind up making sacrifices they wouldn’t have otherwise considered in order to chart a successful path forward for themselves.
The leading indicators that identify whether a product or service may need to pivot can be revealed by number of factors. Consider market adoption, revenues, customer satisfaction or other key metrics associated with a product or service during the pandemic. In order to ensure the enterprise has the necessary market agility to survive with its products and services, a company will have to constantly scan the market— having acquired this market information, a smart organization will strive to understand the customers’ behaviors and values—and adapt its offerings accordingly.
Finally, creating this kind of market agility will require examining and building upon an organization’s partnerships. Understanding the current dynamics of its partners in the business ecosystem will help an organization determine where it should focus in the market and how it should respond. For example, if partners in a particular value or supply chain are able to demonstrate more returns and business, then the adaptive enterprise should focus on that segment of its portfolio.
In our current, highly uncertain environment, organizations must focus on their market agility by assuming a responsive and flexible approach to technology. To do so, they should first assess and manage productivity to ensure the company can effectively meet market needs with their technical infrastructure. For example, taking a Remote By Design™ approach with IT may mean adapting an organization’s online capabilities to meet current market demand. Or it may involve upgrading their digital infrastructure or technology backbone to ensure smooth operations for corporate collaborations and other ongoing business needs.
The pandemic has driven the need for organizations to enable and support new business models or products, which can often be quite challenging from a technology perspective. Scaling up existing capabilities to support current operations is often well within enterprise IT operating models. However, the complexity associated with re-writing business rules, operations, data flow or other operational elements in new business models can often “break” the system, as it requires pivoting in unexpected and unanticipated ways. This type of IT system flexibility and agility is necessary for responding effectively to the pandemic. The same rationale, although likely to a greater extent, also applies to new products or services. Much speed is needed to be technologically adaptive.
Businesses need to think fast and deeply about their organizational agility when considering markets shaped by the pandemic. One crucial element is the evaluation of the cross-functional, future-proofing teams identified in this post. The core idea is to have a cross-functional team operating as close to customers and operating units possible be responsible and free to drive the organizational response in a way that’s fit for market changes.
Implementing an enterprise-wide governance model, designed to enable rapid movement of resources from one unit to the next, can do much to increase an organization’s velocity and agility. The idea of networked teams, featuring a free flow of resources and talent, across business units, geographies or other organizational constructs, can allow an organization to scale quickly where needed, and contract where not. Taking this approach also has the benefit of preserving they key organizational resources, which can also be a long-term challenge and objective of the organization. Note: The next normal will likely require the best your organization’s talent has to offer. Losing key organizational figures, thought leaders and operators during the pandemic might solve short-term operating problems, only to create more far-reaching, long-term problems enterprise wide.
Finally, having a level of transparency in key organizational metrics, whatever those OKRs, KPIs, SLAs or other objective measures available might be, is critical in assessing and responding to market needs. Understanding how these metrics are being affected by market demands means that when an organization looks to pivot resources, it does so with the knowledge and insights needed to ensure the right resources go to the right efforts.
As companies look to leverage speed for success in the market, rather than be victimized by it, focusing on the adaptability of their enterprise across market, technology and organizational areas will contribute to their goal of successfully navigating the remote present. Those who learn to adapt, and keep on doing so, will find themselves outlasting the pandemic. Be one of them!