Anyone who has ever been to the beach may have found themselves sitting and slowly pouring sand from your hand into a pile of sand. If you watched closely, for some time, the sandpile would not change much, but then suddenly, one little sand corn would cause a significant avalanche. The precise moment before the avalanche is called the "edge of chaos” or the space between order and disorder. The current crisis has many speculating, that the chaos this crisis has created also contains the new order, the new normal. After all, the pile of sand will come to rest, following the avalanche. A new, stable normal emerges. However, trying to describe what will be the new normal is, during the movement of the sand, during the avalanche, is fraught with challenges.
Many articles right now are using actions taken and technologies used during the “avalanche of sand” as the definition of the future new normal. Such as “work-at-home will be the new normal for the digital workplace," or “current customer online behavior defines the future of multi-channel commerce” or “all selling will be virtual." These assumptions are not correct. We do know that things will not be the same. But we also know that when we, as human beings, force ourselves to do something different than what is normal, we rarely succeed. At least we rarely all succeed fully. Take the number of people who pledge at the beginning of the year to exercise regularly, or people that promise to save more money every month. Do they? No, they don’t. So, what we see now will not define what digitalization and business behavior will be about in the new normal. What we know is that it will not be how it was before 2020. To plan for what will be different, we need to look at the fundamental aspects of running an organization, to permanent changes in human behavior. We then need to do three things:
Review and improve your business model
Determine the permanent post-crisis behavioral changes and their impact on your business processes
Create a recovery strategy and execution plan involving digital acceleration
The result? Organizations will discover they need a new Digital Strategy - one that will accelerate previous ambitions. Recovery is Digital. Digital from the core to the edge.
Let’s review the three aspects with more detail to follow in subsequent articles.
Business Model Review:
Should you change your organization's business model as part of your recovery plan? Perhaps. At least you need to review the five elements of your business model against your expectations for the post-recovery environment. The five elements are:
Value Proposition: Your value proposition is a combination of your approach to quality and service, your approach to cost, and how you treat your assets.
Financial model: The financial model consists of your pricing strategy, revenue recognition model, the financial metrics that guide you, and the cash conversion approach of the business.
Suppliers: The first element is the approach to the supplier ecosystem, followed by the logistics network, assets & capital allocation, and data & analytics.
Customers/Partners: This dimension includes the customer ecosystem, as well as the approach to different channels, customer relationships, and lastly, customer segments.
Employees: The employee dimension is a combination of the overall approach to competencies, the culture of the organization, the organization model, and lastly, data & analytics.
Organizations, even in the same industry, will have different business models or emphasis on the five elements above. Your approach to each of these elements is what differentiates your business model from others. During the previous crisis, companies, some new, emerged by changing some of the attributes. For example, Uber compared with traditional taxi companies, changed the definition of assets (they don't own the vehicle), the customer relationship (the customer owns the communication platform, their phone), and the charging model (varied charging based on the type of asset, time and demand). Building your organization's recovery plan requires you to look at your business model. Successful companies will accelerate the use of technology to change or adapt their business model for the post-recovery phase (note that there are other approaches to a business model review such as Strategyzers Business Model Canvas). At a minimum, the CEO and the executive team must reassess the organization's business model as part of the recovery planning process.
Behavioral change and organizational process review
It is critical to developing an understanding of how internal processes, external connections, and major constituencies will change their behavior during recovery and post-recovery. First, map out your critical processes and understand how digital impacts each of them. Your key processes can be group into the following five categories:
Customer processes: These include processes around your clients and partners as well as internal constituencies and processes around sales, marketing, and service.
Supply chain processes: This is the end to end supply chain components from materials planning, supplies, logistics, manufacturing to sales, and operations planning, ending with customer demand.
Product/service processes: These comprise of product/service innovation, creation, planning, and management, through service and customer support.
Workplace and administration processes: The workplace processes, as well as all administrative processes, like finance and HR processes, would be included in this category.
Societal processes: These would involve connection points to external entities such as governments and other interest organizations such as charities.
The digital strategy for recovery must anticipate the behavioral changes that all constituencies in each of these five categories will display, post-recovery. For example, in customer processes, customers will change their online purchasing behaviors. The new normal between online and in-person purchasing is a spectrum, in which the equilibrium is not the behavior before the crisis, not the behavior during the crisis, but a new point post-recovery between online and in-person purchasing. Online purchasing behavior is not the only behavior that changes. So will online servicing versus in-person servicing, or online selling versus in-person selling. Anticipating the combination of post-crisis behavioral changes on the entire set of customer processes will allow your organization to plan for an impact customer strategy and for a rapid acceleration of the right digital projects that affect the customer processes.
Recovery & Execution Plan:
Pre-crisis many organizations had consolidated corporate strategy and digital strategy, some to the extent of having one person or team responsible for the coordination and execution of a combined strategy. Your digital strategy is now obsolete, together with your corporate strategy. As part of recovery planning, organizations must be focused and not fragment their strategy planning, digital planning, and recovery planning. The recovery strategy is the first step in articulating a new corporate strategy. The corporate strategy will be digital. Four critical elements of recovery and execution planning are:
Build a cross-functional executive team supported by a Recovery Program Office.
Build a Recovery Plan and Execution framework, but ensure it is iterative, agile, and able to leverage input from all internal and external sources continuously
Implement a framework for tracking projects, feedback, and progress against KPIs and metrics for the recovery plan
Build a recovery communication plan to ensure consistent, clear, and factual communication at all levels in the organization
For more detail see the article: Recovery Execution – The next Phase of Crisis Planning. Implementing these four recovery recommendations will result in a Digital Acceleration of the organization. So recovery will require you to review all of your digital projects and reprioritize them according to the impact of the recovery process and in establishing your organization's new normal.
The Sondergaard Group is working with organizations to assist them in developing and evolving their recovery strategy and execution as well as their leadership skills.