If 2020 taught us one thing, it’s that agility is not as hard as everyone thought it was. When pressed, many major companies with complex supply chains, global geographic footprints, and entrenched systems and processes were able to pivot, retool, and reinvent themselves in a matter of weeks. The challenge has not been quickly adjusting course; it’s been finding a way to maintain some semblance of profitability in the process.
We see this hard truth reflected now, as we enter the tenth month of operations in the “new normal” business environment with corporate earnings for the S&P 500 projected to decline 1.6% in the fourth quarter. Peel back the layers of those financial filings and you’ll see a familiar refrain: large corporations have been wildly successful in transitioning employees to work-from-home models; touchless, digital-first customer channels have been resonating with consumers; and strategic pivots into new models have shown promise. But these efforts have also been very expensive.
The dirty little secret of many businesses’ pandemic strategies has been to implement stopgap solutions and survive-at-all-costs operational tweaks. Those helped them retain clients in the short-term but are not sustainable enough to maintain over a prolonged period of heightened volatility. They were agile, but they weren’t resilient.
What we’re learning as the crisis drags on is that businesses must be prepared not just for a second, third, or even fourth wave of COVID-19 but rather for a future of fast-paced, unpredictable change that will continue in a post-COVID-19 world. And that’s going to require more than just agility alone.
Agile strategies need to be buttressed by an approach to sustainability that supports the company’s ability to stay nimble without starting over from scratch every time the economic tides change. Based on my firm’s work with dozens of multinational businesses the past several months, I’ve found three key ingredients common in companies that are striking that balance: data-enabled decisioning, a robust, cloud-based infrastructure, and cultural adaptability.
To find an example of just how important precision-targeted data has become to businesses operating in the current environment, look no further than the U.S. mortgage industry. Buffeted by a contradictory set of variables that include a 14-year high in home sales volume, a 200% annual increase in refinancings, and record levels of unemployment, mortgage lenders have been pushed to the limit. Strained on the origination side to meet new loan demand and challenged on the servicing side to meet the needs of existing customers trying to defer payments and adjust terms, the industry needed to target its communications and its personnel carefully.
In that scenario, the old resiliency playbook of simply throwing layers of new technology and people at the problem would not suffice. Mortgage companies needed to be able to triage. Ultimately, that capability came in the form of high-frequency, granular data elements such as hyperlocal real estate and economic trends, current COVID-19 infection rates, and household mobility data. Those data points could be used to align strategic initiatives with the uneven recovery across the United States. Understanding the trends has been critical to optimizing the timing of marketing and new business underwriting strategies — for those mortgage companies that have the data. Those who don’t are relegated to playing a costly game of whack-a-mole.
If businesses are to embrace data-enabled decision-making and apply predictive analytics to strategic metrics, data needs to be accessible from anywhere, anytime.
We’ve seen the direct impacts of gaps in cloud readiness in every industry during the pandemic. Common examples included enterprise resource planning systems, HR systems, and financial portals designed to support verticalized functions and specific purposes. Some of these were suddenly no longer viable in the decentralized world of company-wide work-from-home operations. Many of these systems were either inaccessible, not compatible, or just not functional in time. That left teams to turn back to Excel spreadsheets, emails, and redundant workflows.
Contrast that with the experience of a large United Kingdom utility we’ve been working with that has invested heavily in building a cloud-based management information system. The system lets them immediately identify if an individual household is having a problem or an outage, preemptively spot customers who are having payment issues, and even recognize if customers are in the process of moving homes and need to switch accounts. These critical pieces of information can then be routed to the right teams – regardless of whether they are working on a truck in the field, in a home office, or at corporate headquarters – keeping everyone coordinated and prioritizing workloads.
The crucial final piece of the puzzle is something you cannot buy. It’s the ability to accept that everything is fluid and things will likely stay that way for the foreseeable future. Companies that rigidly cling to the old ways of doing things and place their bets for tomorrow based on what is true today will be left behind.
New research suggests that companies with strong, strategically aligned cultures that have the capacity to adapt quickly to dynamic environments earn 15% more in annual revenue than less adaptable peers. Maintaining that culture can be tough in a world where large swaths of workforces are operating out of their spare bedrooms. But we are already seeing examples where companies are leaning into this new reality, adopting more flexible work models that workers have wanted for some time. Accordingly, they see higher levels of productivity and increased diversity in their workforces, strengthening their cultures along the way.
The pandemic will be temporary, but its effects on consumer behavior, digital transformation, and remote work are here to stay. Creating a sustainably resilient organization in this environment will require much more than merely having work-from-home capabilities and digital sales channels. That’s what kept us operational during the crisis. The companies that lead in the future will build a clear organizational structure around their digital models. To succeed at scale, resilient organizations will need to be powered by enterprise systems that facilitate seamless collaboration and support productivity and engagement built on a data and analytics infrastructure that enables rapid response to changing markets.
Rohit Kapoor is vice chairman and chief executive officer of EXL