It was an age of wisdom, it was an age of foolishness

While there are clear, visible signs that the world is beginning to focus on recovery from the Covid-19 Pandemic, it is important to note that we are not anywhere close to being out of the danger zone. Infections are rising worldwide with China imposing strict lockdown measures to battle with new waves of infections. The US is also seeing an increase in infections while there are concerns about a Fifth Wave in South Africa.

From a business point of view, the disruption caused by Covid has enforced permanent change in some operating models while other operating models are trying their best to adjust to the challenges that they face.

Being a top line executive is a calling more than a job. The decisions that they make are often the differentiators between a successful company and an unsuccessful company. A PwC survey recently pointed out that, in these trying times, these decisions are often the difference between a company that survives the Covid storm and companies that do not.  

The survey pointed out that executives are ready to transform their companies — changing what they do and how they do it.

One of the respondents to the survey pointed out that, even before Covid-19, there was a need for businesses to fundamentally restructure to succeed in a more digital and disruptive age. The pandemic has accelerated this timeline, and now there’s a historic opportunity to reset and generate new value – especially while stakeholders are more willing than before to support a transformation program as economies emerge from the pandemic.

Optimistic about the future
The majority of business leaders are optimistic about the future and planning for growth, with a significant increase in the importance of transformation on their agenda.

The survey points out that:

• 48% of executives plan for accelerated growth but are sceptical that today’s core will contribute sufficiently;
• 78% expect to transform their companies in the next three years to react to fundamental changes in their markets; and
• 51% plan to develop new business and value creation models, supported by digital investments.

The survey adds that, as businesses prepare for recovery, the majority of executives feel optimistic about a post-COVID-19 rebound. At the same time, most companies also plan to embark on significant transformations, focused on changing both the way they operate and how they create value for customers. Transformation is planned across all sectors, with some industries such as pharmaceuticals and insurance expecting the most fundamental changes.

Starting afresh and adapting to change
The survey points out that most executives are focused on building new business models and adapting the operating model to compete with new digitally enabled capabilities.

The survey adds that:

• Unlike in previous crises, such as the Financial Crisis of 2007/08, when companies focused on cutting costs, the pandemic has accelerated the need to fundamentally transform business, with executives willing to invest in transformation;
• Business leaders report measures to boost revenues as their top priority, such as developing new business models and revisiting the company strategy;
• Environmental and social governance (ESG) has raised on the executive agenda with currently 17% of all participants putting it as a business priority;
• Additional investments of 10-15% on average are going primarily into digitization, cybersecurity and sales to drive top-line growth; and
• Digital investments are focused on developing new products and services that can be integrated with digital business models, with the highest percentages going into IT and digital capabilities (15% additional investment) and cybersecurity (11%), as well as environmental, health and safety functions (11%).

Executives are focused on developing new business models and enabling digitization to get out of the crisis and drive future growth. Yet, investments in digitization continue to be largely focused on enabling new products and services, with expected cuts in the front office. This data suggests that many companies see the need to revisit and revise their core business strategy, not just cut costs, restructure their portfolio, or develop ad-hoc tech solutions. ESG has become part of the executive agenda with further need for companies to elevate this priority going forward.

Emerging stronger from the crisis and the role of the turnaround professional
Far from being fish in a barrel at a shooting range (prime game for hunters), business executives are not helpless when it comes to their recovery efforts. The survey points out that there are a number of interventions that they can put in place.

• Revisit strategic priorities. As business owners consider their future strategy and business models, they need to re-evaluate their value creation plan in light of recent changes to the industry and markets. Turnaround professionals work with companies (distressed or those going through informal restructuring) to explore all angles to restart the value engine and make it ready for long-term growth. From portfolio optimisation to ESG strategies and maximizing shareholder return, a holistic value creation plan can deliver sustained outcomes;
• Invest in digitization and ESG. Leverage digitization and smart ESG investments to implement a new way of working and to develop new business models, in line with revised strategy. Keep pace with new cost benchmarks post-Covid-19 and look for areas where the company can outperform its competitors. Successful digital transformations should do more than achieve the end state, they must build both a transformation capability and organisational agility. There are four building blocks to successful transformation: designing a capability-driven strategy, aligning your workforce, leveraging advanced technologies in the front and back offices, and managing costs to become fit for growth;
• Bring people with you. Companies should proactively engage their workforce in the process of change and in any new ways of operating, especially in light of transitions to new methods of working. Turnaround professionals help clients enhance their workforce strategy, workforce experience, and work environment today, to position them for success tomorrow. Whether you want to improve the performance of your workforce, develop and move talent around your business, or mitigate risk, turnaround professionals can combine their skills to deliver a solution that’s tailored to the distressed business and its people.

Finding value
The title of the PWC Survey (downloadable below) was aptly titled: Great Expectations- Global executives respond to business disruption. I then found a quote from Charles Dickens’ Great Expectations which now seems very prophetic: we changed again, and yet again, and it was now too late and too far to go back, and I went on. And the mists had all solemnly risen now, and the world lay spread before me. How many executives went through this kind of change over the past two years?

Change is difficult for most people and psychologists will tell you that the natural human response is to resist change because it brings you a step closer towards unfamiliarity and a step further away from your comfort zone. In business, change (however scary it is) needs to be embraced because the dynamics that drive the market change all of the time. this forces disruption onto a company. If you can get a step ahead of this disruption, you can successfully address challenges.

The past two years has been a perfect advert for turnaround professionals and the value that they add to companies. To quote another Dickens novel (A Tale of Two Cities) it really is a case of: it was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch (the beginning of a period in the history of someone or something) of belief, it was the epoch of incredulity, it was the season of Light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us.