VUCA transformation

The crisis is more than ever the time for business transformation

While the effects of the crisis continue to grow stronger, companies are refocusing on their core business, ensuring profitability, freezing strategic projects.

However, numerous analysis from Harvard, McKinsey and BCG show that companies which maintain their strategic investments and rethink their transformations significantly increase their competitive advantages, gain market share and improve their profitability. These effects are observed in the short term, as soon as the crisis ends, but also over the following 4-5 years.

We are today exposed to a multidimensional crisis, an economic crisis with a slowdown resulting from the activity shutdown which cause a gradual deterioration of the economy first by the decline in companies’ activity, negatively impacting their treasuries and resulting social plans, which sets off a recession negative spiral.

We have also entered a deeper crisis of models, economic, managerial, social and environmental. The duration and extent of the crisis is disrupting our standards and invites  to transform strategies, organizations, management principles as well as understanding consumer needs.

During this period, we are invited to rethink the modes of organization of companies and at the same time methods of to transform them.

We believe that in times of crisis, the objectives, constraints and challenges are different than in times of growth. This requires adopting a transformation approach specific to this context.

Why transform now?

Because the crisis reveals the inadequacies of business. The most robust will undoubtedly be able to weather the crisis without adapting their strategies, but at the expense of a decline in their competitiveness in the face of competition which will have had to evolve. They will then have missed the opportunity offered by the crisis to improve the way the business operates. The other must adapt their operations and strategies in order to overcome the challenges of the crisis. The amplitude of the adaptation depends of two factors:

  1. their business sector exposition to the crisis effects
  2. Their readiness to adapt their operating model to grow or resist in time of crisis

Because those who have known how to transform faster will have an advantage during the crisis and especially after the crisis. The companies which knew how to transform during the financial crisis of 2008 improved their EBITDA by 25% against 4% for the competition during the 5 years which followed say a BCG analysis.

Because the crisis is opening up new opportunities via the readjustment between demand and offer: new market opportunities, consumer needs, competition challenged. The current crisis requires rethinking the distribution strategy, the management of contact points and supply chain, customer relationship management, which have become mainly remote. Although complex, this transformation generates additional, service-based, or demand pockets opportunities via a transformation funnel that integrates the new environment.

Why rethink the organization and not just the offers?

Because organizational innovation offers a better return on investment than product and service innovation.

Both in terms of value but also predictability. Because managerial innovation concerns the company, it can be better controlled than product innovation subject to competition and consumer preferences and to the uncertainties of marketing, such as a change in regulation (or administrative shutdown), logistical issues such as most businesses that have adopted e-commerce on a forced march.

Because it enables the organization to adapt to the turmoil of the crisis when the product cannot. Only managerial innovation can prepare the company to better react to the crisis and the challenges to come.

Because it gives teams perspective and strengthens alignment and engagement in difficult times. Because managerial innovation impacts the daily life of teams, their environments and their missions, it is more effective in aligning and engaging teams than launching a product.

Why change the approach to transformation programs?

In times of crisis, the fundamentals must be solid, operational excellence, profitability, team commitment, top-down transformation plans that are too ambitious can weaken these fundamentals by disrupting the structure operations and disorienting the teams.

A gradual approach should be adopted to preserve the core business and continue while leading the company into a new organization.

To ensure the relevance of the transformation and its business impact, it is more than ever necessary to base the transformation on the reality of the market and the organization to define the target organization aligned both with the strategy the market and teams.

The fundamental principles are pragmatism in the approach and iterative in the process to build a resilient, relevant and engaging organization while making a smooth transition between the two organizational schemes.

Finally, both in the design and in the management of change, it is necessary to maintain a systemic vision to protect against any collateral damage to the transformation plan. It is therefore necessary to articulate all the components of the company its strategy, processes, tools, structure and teams.