There is light at the end of the pandemic tunnel. But some trends have emerged that will affect businesses for the long haul.
There have been a number of announcements over the past week that are positive, but there are warning signs within that news. On a positive note, vaccinations are now increasing and along with that, hospitalizations and deaths are decreasing. However, as new variants emerge, public health officials warn the populations that there are concerns about vaccine efficacy. It is also possible that COVID-19, like the flu, may become an annual unwelcome visitor, though with a far less lethal effect.
Businesses that have weathered this storm have done so by learning to adapt to a rapidly changing business environment. Those companies that initiated changes assuming these would be short-term in nature may be forced to re-evaluate their beliefs.
4 trends that are changing the way organizations do business
Growth in a remote workforce – This has been one of the biggest trends that we’ve seen. According to a recent McKinsey article, “The McKinsey Global Institute (MGI) estimates that more than 20 percent of the global workforce (most of them in high-skilled jobs in sectors such as finance, insurance, and IT) could work the majority of its time away from the office – and be just as effective.” It’s not just the industries cited by McKinsey. We’ve seen many other industries that may have had concerns about employees working from home, only to be surprised at the level of productivity that they saw. A PwC Remote Work Survey conducted last month indicated that remote work has been an unexpected success: “83% of employers now say the shift to remote work has been successful for their company, compared to 73% in our June 2020 survey.” But what has made this all possible is another big trend…
Advancements in technology – The McKinsey article quotes Microsoft CEO Satya Nadella who stated in April 2020, “we’ve seen two years’ worth of digital transformation in two months.” When we consider what COVID has wrought, it’s almost impossible to imagine employees would be able to conduct business remotely without platforms like Microsoft Teams, Zoom, or other communications tools. Collaboration, which is so essential to success, is enabled not just through these platforms, but also through AI and the digitization of multiple functions within the organization. Resistance to change in this area proved to be a major mistake for companies that still wanted to cling to the status quo. And whether your business is B2C or B2B, the reality of the need for digitization is the same. Another McKinsey survey found that was published in October of 2020 noted that “companies are three times likelier than they were before the crisis to conduct 80 percent of their customer interactions digitally.” But there is a downside to this for certain industries…
Drop in conventions, business travel, and office space – The drop in conventions caused by COVID could be temporary; however, Teams and Zoom have forced companies to take a close look at when and why their employees need to travel when they can get the same results online. This is a boon for companies that can cut travel expenses but dreadful for hotels, airlines, car rentals and restaurants, especially in large cities, that have always relied on business travelers for revenue. Another expense that could be cut is office space. Certainly not everyone can or should work remotely, but if a good chunk of your workforce can work just as productively away from the office, do companies need to rent major office space? Again, good for the company, bad for real estate.
Reassessment and realignment in the supply chain – Those of us that rely on suppliers being able to supply the product we need to manufacture goods understand the necessity of having confidence that suppliers will be able to meet their obligations. This has become ever more essential as business has relied on just-in-time (JIT) inventory rather than carrying surplus inventory that may or may not be needed. But COVID, especially in the beginning wreaked havoc with some companies…and some countries…shutting down for a time. For those dealing with suppliers in Asia, there is an annual break due to Chinese New Year; however, since customers know that well in advance, they can plan for it accordingly. COVID was totally unexpected and showed huge vulnerability in the supply chain. Many companies started to onshore their inventory, working with domestic suppliers when possible. This has made our reliance on trucking fleets ever greater. The pandemic showed us all the valuable role trucking plays in the supply chain. The pandemic has forced procurement to take a deep dive into their supplier base, to buy smarter, and with greater insight.
We should expect these four trends to continue (we’ll have to see about conventions and expos) even after we are able to get a good handle on the pandemic. These trends, caused by a crisis, have transformed businesses in ways we could never have anticipated before. If your company hasn’t discovered how to successfully follow these trends, this may be the time to explore what you need to do.
Read how fleets need to reinvent themselves as well in my IdeaXchange blog.