The COVID-19 pandemic has completely transformed business operations across the world. Organisations are searching for new strategies and solutions to reduce costs and thrive in the post COVID world.
Actions to address the COVID-19 crisis can be divided into three major stages: “respond” (immediate actions to respond to the crisis), “recover” (stabilize operations), and “thrive” (a defined strategy with structural changes to thrive). These stages culminate into a long-term operating environment we call the “Next Normal,” which represents new business conditions established as a result of the societal, commercial and technological changes caused by public and private reactions to COVID-19.
Organisations in India today are mostly in the “respond” or “respond to recover” phases as they respond to the immediate crisis and turn to recovery actions to stabilize their operations. Indian organisations expect to pursue automation as the top transformation action to reduce dependency on the labour and increase operational efficiencies. They also expect to work on transforming supply chain as well as business processes so as to address supply chain and distribution challenges and satisfy increased sales opportunities. As organisations move through these phases, the expectations for revenue growth, although down from pre-COVID-19 levels, remain highest for India respondents as 66% of the respondents as per a‘Save-to-thrive’ survey done by Deloitte titled ‘Enterprise transformation and performance improvement strategies amidst the pandemic’.
Relative to pre-COVID-19 levels, the likelihood of undertaking cost reduction initiatives for Indian respondents increased from 57 percent to 73 percent, which is amongst the top four surveyed countries globally. Additionally, four out of five companies in India now have cost reduction targets that exceed 10 percent. By using cost reduction strategically to transform the enterprise and improve competitiveness – which includes investing in key capabilities such as automation and remote work that align with new realities of a post crisis business environment- companies can leverage their cost saving efforts to not only transform how they operate but to position themselves to thrive in the ‘Next Normal’.
Decisions that companies make today to cope with COVID-19 can help or hinder their positioning for the future. As per the survey, organisations are evolving into a “Save-to-Thrive” mindset in the ‘Next Normal’ in which they are accelerating strategic transformation actions to make shifts to their operating models, products and services and customer engagement capabilities in the following way:
- Revenue sources will be fundamentally different: The fastest growing revenue sources will be digital channels (vs. physical channels) and domestic operations (vs. international operations). In order to ‘Thrive’ in the ‘Next Normal’, organisations are also taking up digitisation to gain business transparency for sales operations and to make processes more efficient and resilient.
- IT infrastructure, remote working, and digital channels will be the top operating model priorities: Top operating priorities will be enhancing IT infrastructure; enabling remote work; and enabling pre-sale, sale and post-sale activities through digital channels. In the ‘next normal’ companies are expected to focus on enhancing the IT infrastructure in management and operations by creating control towers for sales, logistics, operations, maintenance, etc. for better visibility and control.
- Top product strategies for the next normal focus on innovation, customisation and portfolio rationalisation: In the next normal, respondent’s focus to remain on core products with rationalised portfolio to maximize core competitive advantage and prioritise products in the lower priced segments to retain their loyal customers.
- Next Normal customer engagement strategies will be driven by flexible customer experiences, cross selling and digital channels: As a way forward into the ‘next normal’ stage, organisations will stay focused on their existing customer base by maintaining high customer engagement through empathetic purpose–driven digital content,improved after sales services, fortify distribution in stronger markets and gain an edge over competition.
- IoT and AI will be the key technologies: In the next normal, respondents are not only looking at effectively utilising the IoT and machine learning capabilities to improve operating efficiency but also at building AI and cloud capabilities for creating predictive models to prepare for the future.
The survey clearly shows how organisations that strategically pursue cost reduction in the wake of COVID-19, while concurrently reimagining the enterprise and transforming work and business models, can be more successful in the next normal. At the same time, how investing in critical technology capabilities such as cloud and digital can increase business agility, improve competitiveness and better prepare organisations to persevere, and position them well for the post-COVID environment.
By Shridhar Kamath, Partner and Swapnil Kakad, Manager, Deloitte India