October 20, 2020 | Business Decision-Making
COVID-19 obliges companies to establish strategic plans and to undertake technological transformation.
Technological transformation has a key role in the strategic plan of organizations, by simplifying the organizational structure and standardizing processes, which allows for faster decision making.
If all crises are faced with fear and uncertainty, things that people and companies do not usually get along with, COVID-19 is shattering all possible alternatives that could have been devised even in the worst possible foreseen scenarios.
Nevertheless, and in view of such a level of difficulty in which the impact of the pandemic on the new global scenario is still unknown, whether at the economic, social or political level, what still remains clear is that companies must prepare themselves to do business differently, to be managed differently, and to establish a new framework for the relationship between company and worker.
Therefore, the way executives face the next decade will be based on the changes that will need to be implemented in the organization at all levels within the next six to twelve months, in order to adapt to market needs and remain sustainable in the medium and long term.
In this context, big changes come from the increased awareness of executives about the changes that need to be made in the organization.
Although some trends are clearer, managers will have to take into consideration the following seven changes:
1. Agility in the decision-making process. The decision-making process has to be much more agile within the organization, so the organizational structures will get simplified, reducing their verticality, concentrating the decision power in fewer people who, in turn, will have higher levels of responsibility.
2. Better definition of tasks. One of the most important changes will come from the greater definition of the tasks of each individual within the organization. To do this, job descriptions must be redesigned to address the challenge of technological transformation with the incorporation of new profiles of more specialized professionals (many of which probably do not yet exist within the company at the moment). At the same time, the management of these new employees will be a challenge, that will affect the entire organization since they will bring about more agile strategies in the way of doing things.
The technological transformation of companies is matched by the need for people to adapt to change. Therefore, now more than ever, leadership of managers becomes a critical attribute for the sustainability of the business in the short and medium-term.
3. Simplification of the processes. All of those tasks that are repetitive and that barely add value to the organization will be standardized, which is why new platforms will have to be implemented to quickly and efficiently increase productivity; or, more simply, many of these tasks will disappear. These processes will affect, most of all, the administrative or back-office areas.
4. Reduction of the financial debt. Over the last ten years, companies have significantly increased their financial debt standing; and given the current situation of needing maximum liquidity, a period of forced deleveraging will begin that will, in turn, lead to the renegotiation of financing conditions. This situation will force many companies to downsize, which will be exploited by those who are financially stronger in order to improve their market position.
5. Reshaping of the commercial strategy. The increasing digitalization of customers is leading companies to strengthen their distribution and online sales channels, and therefore the commercial structure will be affected in a more aggressive way commercial costs will be adjusted, without reducing the established objectives, which means that agreements will have to be reached with third parties that until now were not part of the commercial strategy.
6. Greater strength of entrepreneurs. The need for companies to reduce their financial risks will increase unemployment levels globally, especially in those sectors or markets with low levels of automation, which will force many people to start their own businesses. Undoubtedly, the impact of all this activity will be evident in five or ten years, when many of these companies will be the ones that speed up and set the pace of the market in their respective sectors.
And although the handicap of 5G implementation will be a hurdle in many countries, opportunities for entrepreneurs to succeed globally will increase, as the technology will be acquired anywhere, without significant costs of infrastructure. Digitalization initiatives such as those in Estonia or Israel, or Colombia’s Orange Economy will be examples of change pursued around the world.
7. Flexibility in labor relations. If anything is changing in recent months, it is the working relationship between employees and employers. The realization that it is possible to have high performance and be productive without going to an office during traditional working hours, along with the need for companies to reduce fixed costs, will make working at a distance a much more desirable option for a significant part of the workforce. As a consequence, it is likely that this will bring new types of work relationships, remuneration and bonding, with a greater focus on objectives that encourages greater flexibility between both parties.
There are several other changes that will take place, many of which we are not yet aware of. And some sectors that were, until now, more still from a technological perspective, such as Education, will take a step forward with mixed teaching models that combine asynchronous and face-to-face modules.
Everyone in today’s workforce, without exception, is facing a change like never before. And companies need managers with greater flexibility, strategic vision and open to collaboration with other companies, which, in many cases, was not part of the strategic plan.
If we want to be part of this process of change that lies ahead of us, we have to adapt and leave behind our comfort zone. We have no choice!
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